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Free CTP Relationship and Bank Account Management Practice Questions & Answers
82 exam-style Relationship and Bank Account Management questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.
100% free · No login to startQuestion 1
Which of the following is the primary reason a large multinational company maintains relationships with several banks rather than concentrating all activity with one provider?
Select an option first.
Correct answer: A — To diversify counterparty risk and avoid over-reliance on a single institution
Explanation: A multi-bank strategy spreads counterparty credit and operational risk so that the failure or withdrawal of any single bank does not cripple the company's cash operations. It also preserves access to specialized regional or product capabilities. Pricing and documentation burdens generally increase, not decrease, with more banks.
Question 2
A Request for Proposal (RFP) issued by a treasury department is best described as a document that:
Select an option first.
Correct answer: B — Formally solicits detailed service, pricing, and capability responses from prospective providers
Explanation: An RFP is a structured solicitation sent to shortlisted providers requesting comprehensive information on services, technology, pricing, service levels, and references so the company can compare them objectively. It is a selection tool, not an operational or documentation record.
Question 3
Which is a recognized advantage of concentrating banking activity with a single primary bank?
Select an option first.
Correct answer: C — Stronger relationship leverage, simpler administration, and potential pricing efficiencies
Explanation: A single-bank or lead-bank approach concentrates volume, which can strengthen the relationship, simplify account administration and reporting, and improve pricing through economies of scale. It does not remove counterparty risk and no single bank covers every market.
Question 4
How does a Request for Information (RFI) typically differ from a Request for Proposal (RFP)?
Select an option first.
Correct answer: A — An RFI gathers preliminary, higher-level information to narrow a field, while an RFP seeks detailed, comparable proposals
Explanation: An RFI is an earlier-stage, exploratory document used to gather general capability and market information and pre-qualify potential providers. The more detailed RFP then goes to a shortlist to obtain specific, comparable pricing and service commitments.
Question 5
A company undertaking a bank relationship rationalization project is most likely trying to:
Select an option first.
Correct answer: C — Reduce the number of banking relationships to those that provide the best overall value
Explanation: Rationalization means reviewing and reducing the number of banks and accounts to a manageable core set that delivers the best combination of service, credit, technology, and price. This lowers administrative complexity and strengthens remaining relationships.
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Question 6
A Treasury Management System (TMS) is best described as software that:
Select an option first.
Correct answer: D — Centralizes cash visibility, forecasting, payments, and financial risk management activities
Explanation: A TMS integrates core treasury functions such as bank connectivity, cash positioning, forecasting, payment processing, debt and investment tracking, and risk management into one platform. It complements, rather than replaces, the general ledger and ERP.
Question 7
Which of the following is a core function typically provided by a treasury workstation?
Select an option first.
Correct answer: A — Automated bank statement import and cash position reporting
Explanation: A treasury workstation automatically imports bank balance and transaction reporting, consolidates positions across accounts, and produces the daily cash position. These are foundational cash-visibility functions of treasury technology.
Question 8
Which benefit is MOST directly associated with implementing a TMS?
Select an option first.
Correct answer: C — Improved cash visibility and greater automation of manual treasury tasks
Explanation: A primary justification for a TMS is consolidated, timely visibility into cash across banks and automation of manual, spreadsheet-driven processes, which reduces errors and frees staff for analysis. It does not affect market rates or eliminate the need for banking relationships.
Question 9
BAI2 and SWIFT MT940 are examples of:
Select an option first.
Correct answer: A — Standardized bank reporting file formats for balance and transaction data
Explanation: BAI2 and MT940 are widely used standardized formats banks use to deliver prior-day balance and transaction reporting to corporate treasury systems. Standard formats let a TMS ingest data from multiple banks consistently.
Question 10
Integrating the TMS with the company's ERP or general ledger primarily improves:
Select an option first.
Correct answer: A — The speed and accuracy of recording and reconciling treasury transactions in the accounting records
Explanation: TMS-to-ERP integration automates the transfer of treasury transactions into accounting, improving reconciliation speed and accuracy and reducing manual journal entries. It streamlines the month-end close and supports better cash reporting.
Question 11
The primary purpose of a bank's Know Your Customer (KYC) process is to:
Select an option first.
Correct answer: B — Verify the identity and legitimacy of the customer to prevent money laundering and financial crime
Explanation: KYC requirements compel banks to verify a customer's identity, ownership, and business purpose to comply with anti-money-laundering and counter-terrorist-financing regulations. Corporations must supply supporting documentation before and during the account relationship.
Question 12
An authorized signatory on a corporate bank account is a person who:
Select an option first.
Correct answer: C — Has been formally granted authority to transact or approve activity on the account
Explanation: Authorized signatories are individuals the company designates, usually through a board resolution, to sign checks, initiate payments, or otherwise act on an account. Maintaining an accurate, current signatory list is a core account-administration control.
Question 13
A corporate resolution provided to a bank at account opening typically:
Select an option first.
Correct answer: A — Documents the board's authorization to open the account and designates who may act on it
Explanation: A corporate (banking) resolution is a board-approved document authorizing the establishment of the account and specifying the individuals empowered to transact on it. Banks require it to confirm the account was properly authorized by the entity's governance.
Question 14
Which document set is MOST commonly required to open a new corporate bank account?
Select an option first.
Correct answer: B — Formation documents, tax identification number, and authorized signatory information
Explanation: Banks typically require entity formation documents, a tax identification number (such as an EIN), a banking resolution, and signatory identification to satisfy KYC and open the account. These establish the entity's legal existence and who is authorized to act.
Question 15
A U.S. company with signature authority over foreign bank accounts exceeding the reporting threshold may be required to file which report?
Select an option first.
Correct answer: D — A Report of Foreign Bank and Financial Accounts (FBAR)
Explanation: U.S. persons with a financial interest in or signature authority over foreign financial accounts whose aggregate value exceeds the regulatory threshold must file an FBAR annually. Treasury must track foreign accounts and signatories to ensure compliance.
Question 16
A signature card maintained by a bank is used to:
Select an option first.
Correct answer: B — Record the specimen signatures of individuals authorized on an account
Explanation: A signature card captures the specimen signatures of authorized parties so the bank can verify the authenticity of instructions. It is a fundamental control document in account administration, though increasingly supplemented or replaced by electronic mandates.
Question 17
A bank account analysis statement primarily provides a company with:
Select an option first.
Correct answer: D — A detailed itemization of services used, volumes, per-item charges, balances, and earnings credit for the period
Explanation: The account analysis statement itemizes the services a company used during the period, the volumes and unit prices, balance information, and any earnings credit applied against charges. Treasury uses it to verify billing accuracy and manage bank fees.
Question 18
AFP Service Codes are used to:
Select an option first.
Correct answer: A — Provide a standardized coding system for bank services so charges can be compared across banks
Explanation: AFP Service Codes are a standardized, industry-wide taxonomy that maps individual bank services to common codes, enabling apples-to-apples comparison of billing across different banks. They greatly simplify analyzing and benchmarking account analysis statements.
Question 19
The earnings credit rate (ECR) on an analyzed account is best described as:
Select an option first.
Correct answer: B — A notional rate applied to collected balances to generate credits that offset bank service charges
Explanation: The ECR is a soft-dollar rate the bank applies to a customer's investable (collected) balances to produce an earnings credit that offsets eligible service charges. Unlike interest, the credit generally cannot exceed fees and is not paid out in cash.
Question 20
An analyzed (analysis) account differs from a standard interest-bearing account in that it:
Select an option first.
Correct answer: B — Applies an earnings credit on balances to offset service charges rather than paying cash interest
Explanation: An analyzed account uses the earnings credit mechanism, applying a notional rate to balances to offset fees, and is common for corporate operating accounts. A standard interest-bearing account instead pays out cash interest on balances.
Question 21
A Service Level Agreement (SLA) between a company and a bank primarily:
Select an option first.
Correct answer: C — Defines measurable performance standards the provider commits to, such as availability, accuracy, and response times
Explanation: An SLA specifies the quantifiable service standards the provider agrees to meet, such as system uptime, processing accuracy, and problem-resolution times, often with remedies for shortfalls. It gives both parties an objective basis to manage performance.
Question 22
Which of the following is a typical performance metric found in a bank services SLA?
Select an option first.
Correct answer: D — Guaranteed system uptime percentage and transaction processing turnaround times
Explanation: SLAs commonly include measurable commitments such as platform availability (uptime), payment cutoff and processing times, error rates, and support response targets. These metrics make service quality objective and enforceable.
Question 23
When negotiating a service provider agreement, an important non-price term for treasury to address is:
Select an option first.
Correct answer: B — Contract term length, renewal, and termination provisions
Explanation: Beyond price, treasury must negotiate term length, renewal mechanics, and termination and exit rights so the company retains flexibility and is not locked into unfavorable arrangements. These provisions materially affect the relationship's cost and risk over time.
Question 24
When selecting a service provider, why should price NOT be the sole evaluation criterion?
Select an option first.
Correct answer: A — Because service quality, technology, credit commitment, financial strength, and reliability also drive long-term value and risk
Explanation: The lowest-cost provider may deliver poor service, weak technology, limited credit, or higher operational risk that outweighs the savings. A sound selection weighs total value across multiple criteria, not price alone.
Question 25
Treasury's internal advisory role within a company is best illustrated by:
Select an option first.
Correct answer: A — Advising business units on cash flow, financing options, foreign exchange exposure, and capital-related decisions
Explanation: Treasury acts as an internal financial advisor, guiding business units on liquidity, financing structures, currency and interest rate exposures, and the financial implications of major decisions. This advisory role leverages treasury's specialized market and risk expertise.
Question 26
Project finance is best described as financing in which:
Select an option first.
Correct answer: B — The lender relies primarily on the project's own cash flows and assets for repayment
Explanation: In project finance, lenders look mainly to the cash flows generated by the specific project and its assets as the source of repayment and collateral, rather than the broader balance sheet of the sponsors. It is common for large infrastructure and energy projects.
Question 27
A special purpose vehicle (SPV) in project finance is typically created to:
Select an option first.
Correct answer: D — Legally isolate the project's assets, liabilities, and cash flows in a separate entity
Explanation: An SPV is a distinct legal entity established to own and operate the project, ring-fencing its assets, debt, and cash flows from the sponsors' balance sheets. This isolation supports the non-recourse nature of the financing and clarifies lender security.
Question 28
When advising on capital structure, treasury helps determine the appropriate mix of:
Select an option first.
Correct answer: C — Debt and equity financing to fund the company's operations and growth
Explanation: Capital structure decisions involve balancing debt and equity to fund the business at an acceptable cost and risk level. Treasury advises on this mix, considering cost of capital, flexibility, credit ratings, and financial risk.
Question 29
An in-house treasury center that advises operating subsidiaries on funding and cash management primarily adds value by:
Select an option first.
Correct answer: B — Centralizing expertise so subsidiaries benefit from consistent, specialized financial guidance and better terms
Explanation: A central treasury center concentrates specialized knowledge and market access, allowing subsidiaries to receive consistent advice and benefit from the group's scale in pricing and financing. This improves decision quality and can lower overall costs and risk.
Question 30
Treasury's relationship with the accounting function is important primarily because accounting:
Select an option first.
Correct answer: C — Records treasury transactions and reconciles bank activity to the general ledger
Explanation: Accounting records treasury transactions, performs bank reconciliations, and ensures cash activity is accurately reflected in the general ledger and financial statements. Close coordination reduces errors and supports a timely, accurate close.
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