Question 1

Which of the following payment types is at the greatest risk for fraud?

Options :

A : Wire transfers

B : Credit cards

C : Checks

D : ACHs

Answer: C

Question 2

The “agency problem” refers to:

Options :

A : management’s use of a fiduciary agent for stockholders.

B : a large and active institutional investor base acting on behalf of individual investors.

C : stockholders who allow management to take actions that will benefit management.

D : the internal audit function reporting to the audit committee of the board instead of to management.

Answer: C

Question 3

Netting is used by which of the following as a cross-border payment technique?

Options :

A : European giro providers

B : Foreign subsidiaries of a company

C : Counterparties in a letter of credit transaction

D : TARGET participants

Answer: B

Question 4

The before-tax cost of long-term debt is 10% and the cost of equity is 12%.

The marginal tax rate is 35%. The company's weighted average cost of capital is:

Options :

A : 6.3%.

B : 8.3%.

C : 10.6%.

D : 11.3%.

Answer: B

Question 5

Which of the following are reasons for companies to use controlled disbursement?

I.To obtain timely check presentment information

II.To enhance supplier relationships

III.To increase their available cash

IV.To improve their overall creditworthiness

Options :

A : I and III only

B : II and IV only

C : I, III, and IV only

D : I, II, III, and IV

Answer: A