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Free Questions › CTP › Relationship and Bank Account Management
Free CTP Relationship and Bank Account Management Practice Questions & Answers
150 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 61
Straight-through processing (STP) in a treasury payment workflow is best characterized by:
Select an option first.
Correct answer: B — Electronic processing of a transaction from initiation to settlement without manual intervention
Explanation: STP means a transaction flows electronically through initiation, approval, transmission, and settlement without manual re-entry, reducing errors, cost, and processing time. High STP rates are a common efficiency objective for treasury operations.
Question 62
A company weighing a cloud-based (SaaS) TMS against an on-premise installed system should recognize that the SaaS model generally offers:
Select an option first.
Correct answer: D — Faster implementation and vendor-managed hosting and upgrades, with recurring subscription cost
Explanation: SaaS treasury systems are hosted and maintained by the vendor, typically enabling quicker deployment and automatic upgrades in exchange for ongoing subscription fees and reliance on the provider. On-premise systems offer more control and customization but require internal IT support and capital investment.
Question 63
Under customer due diligence rules, a bank opening an account for a corporation is generally required to identify and verify:
Select an option first.
Correct answer: D — The beneficial owners and controlling persons of the legal entity
Explanation: Customer due diligence and beneficial ownership rules require banks to identify natural persons who own or control a legal entity customer above defined thresholds and a person with significant management control. This transparency helps prevent misuse of accounts for illicit purposes.
Question 64
Electronic Bank Account Management (eBAM) is designed primarily to:
Select an option first.
Correct answer: C — Digitize and automate the opening, maintenance, and closing of bank accounts and signatory changes
Explanation: eBAM streamlines the traditionally paper-intensive account lifecycle by electronically exchanging standardized messages for opening, modifying, and closing accounts and updating mandates. It improves control, audit trails, and turnaround time for account administration.
Question 65
When permanently closing a bank account, a treasury best practice is to:
Select an option first.
Correct answer: A — Confirm no outstanding items or automatic debits/credits remain, redirect them, reconcile the final balance, and obtain written closure confirmation
Explanation: Proper account closure requires ensuring all outstanding checks, ACH debits/credits, and standing instructions are cleared or redirected, reconciling the final balance, transferring residual funds, and obtaining documented confirmation of closure. Leaving accounts dormant creates fraud exposure and unnecessary fees.
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Question 66
Segregation of duties in bank account administration is best illustrated by ensuring that:
Select an option first.
Correct answer: C — The individual who initiates a payment is different from the individual who approves or releases it
Explanation: Segregation of duties requires that no single individual controls all steps of a transaction; for example, payment initiation and approval/release must be performed by different people. This control reduces the risk of error, fraud, and unauthorized disbursement.
Question 67
The distinction between hard-dollar and soft-dollar compensation of a bank is that:
Select an option first.
Correct answer: A — Hard-dollar means paying fees in cash, while soft-dollar means maintaining balances whose earnings credit offsets fees
Explanation: Hard-dollar compensation is direct cash payment of service charges, while soft-dollar compensation leaves balances at the bank so the earnings credit offsets the fees. Companies compare the two based on their opportunity cost of funds versus the ECR to choose the cheaper method.
Question 68
AFP Service Codes are structured so that each code:
Select an option first.
Correct answer: D — Uses a hierarchical structure grouping services into categories and specific service descriptions for standardized comparison
Explanation: AFP Service Codes use a structured hierarchy that classifies each bank service within broad categories and specific descriptions, so the same service maps to the same code regardless of bank. This standardization lets treasury benchmark unit prices across institutions.
Question 69
A company reviewing its account analysis statement notices a service billed at a unit price well above the AFP-benchmarked market rate. The MOST appropriate treasury action is to:
Select an option first.
Correct answer: B — Use the benchmark data to negotiate the pricing with the bank or challenge the charge
Explanation: Benchmarking against AFP Service Code data equips treasury to identify outlier charges and negotiate them down or seek correction of billing errors. Bank pricing is frequently negotiable, especially for high-volume relationship clients, so leverage the data before escalating.
Question 70
In negotiating cash management pricing, the difference between bundled and unbundled pricing is that:
Select an option first.
Correct answer: A — Unbundled pricing itemizes each service separately while bundled combines multiple services into a single fee
Explanation: Unbundled pricing charges for each service individually, providing transparency and easier benchmarking, while bundled pricing groups services into one combined charge. Treasury should understand which model applies to compare providers accurately and detect hidden costs.
Question 71
An indemnification clause in a bank service agreement most directly addresses:
Select an option first.
Correct answer: D — Which party bears responsibility and financial liability for specified losses, claims, or damages
Explanation: Indemnification and liability clauses allocate responsibility for losses, third-party claims, and damages between the company and the provider, and often cap or limit liability. Treasury and legal must scrutinize these terms because they determine financial exposure when errors or breaches occur.
Question 72
A well-negotiated termination provision in a treasury services contract should ensure the company can:
Select an option first.
Correct answer: B — Exit within a defined notice period and obtain cooperation for orderly transition of services and data
Explanation: Effective termination clauses give the company the right to exit on reasonable notice and require the provider to support an orderly transition, including returning or transferring data and continuing services during handover. This prevents disruptive lock-in and protects continuity of operations.
Question 73
In a typical non-recourse or limited-recourse project financing, the sponsors' exposure is:
Select an option first.
Correct answer: C — Generally limited to their investment in the project, with lenders having little or no claim on the sponsors' other assets
Explanation: Non-recourse (or limited-recourse) structures confine lenders' claims largely to the project entity's cash flows and assets, so sponsors risk mainly their equity investment. This ring-fencing is a defining feature that isolates project risk from the sponsors' other operations.
Question 74
Lenders in project finance closely monitor the debt service coverage ratio (DSCR) because it measures:
Select an option first.
Correct answer: A — The project's ability to generate enough cash flow to cover its debt service obligations
Explanation: The DSCR compares the cash flow available for debt service to the required principal and interest payments, indicating the cushion available to meet obligations. Lenders set minimum DSCR covenants to ensure the project can service its debt under expected and stressed conditions.
Question 75
When treasury advises on a project using the weighted average cost of capital (WACC) as a hurdle rate, the WACC represents:
Select an option first.
Correct answer: D — The blended after-tax cost of the company's debt and equity financing weighted by their proportions
Explanation: WACC blends the after-tax cost of debt and the cost of equity, each weighted by its share of the capital structure, to express the company's overall required return. Projects expected to earn more than the WACC generally create value, making it a common hurdle rate.
Question 76
Treasury typically works closely with the legal department when:
Select an option first.
Correct answer: A — Reviewing and negotiating banking agreements, ISDA documentation, and financing contracts
Explanation: Legal reviews and negotiates the contractual terms of banking relationships, derivatives (such as ISDA master agreements), loans, and service agreements to manage legal risk. Treasury relies on legal to ensure enforceability and appropriate risk allocation in these documents.
Question 77
Treasury's collaboration with procurement is MOST directly relevant to:
Select an option first.
Correct answer: C — Optimizing supplier payment terms, purchasing card programs, and working capital
Explanation: Procurement negotiates supplier terms and manages purchasing programs that directly affect payables timing, discounts, and working capital, which are central to treasury's liquidity management. Coordinating on payment terms and card programs improves cash flow and capture of early-payment discounts.
Question 78
Effective collaboration between treasury and financial planning and analysis (FP&A) MOST improves:
Select an option first.
Correct answer: A — The accuracy and usefulness of cash flow forecasts by aligning treasury and business assumptions
Explanation: FP&A holds business-driver and budget insight while treasury holds cash timing and liquidity insight; sharing assumptions produces more reliable cash forecasts. Better forecasting improves liquidity planning, investment, and borrowing decisions.
Question 79
Establishing cross-functional governance for a new bank connectivity project is valuable because it:
Select an option first.
Correct answer: C — Brings treasury, IT, accounting, and legal together to align objectives, responsibilities, and controls across the project
Explanation: Cross-functional governance aligns the multiple stakeholders whose systems, controls, and legal terms are affected, ensuring clear ownership, coordinated decisions, and integrated controls. This structure reduces the risk of gaps, rework, and control failures on complex initiatives.
Question 80
Nostro account reconciliation is important because it:
Select an option first.
Correct answer: B — Ensures the bank's own records of its foreign correspondent balances agree with the correspondent's records, detecting errors and discrepancies
Explanation: Reconciling nostro accounts confirms that a bank's internal ledger of balances held abroad matches the correspondent's statement, identifying timing differences, errors, or unauthorized entries. Prompt reconciliation is essential to control cross-border settlement risk.
Question 81
A limitation companies must consider with cross-border notional pooling is that:
Select an option first.
Correct answer: A — Legal, tax, and regulatory restrictions in some jurisdictions may limit or prohibit it, and offsetting balances across entities raises legal and tax considerations
Explanation: Cross-border notional pooling offsets balances across accounts without physically moving funds, but many jurisdictions restrict or prohibit it, and offsetting across legal entities raises tax, regulatory, and cross-guarantee issues. Companies must obtain legal and tax review before implementing such structures.
Question 82
In a physical cash concentration structure, a header (concentration) account functions to:
Select an option first.
Correct answer: C — Receive funds swept from subordinate accounts so cash is centralized for investment or funding
Explanation: A header or concentration account is the top-level account into which balances from subordinate accounts are physically swept, centralizing liquidity for more efficient investment, funding, and control. Concentrating cash reduces idle balances and improves the yield on the group's funds.
Question 83
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 84
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 85
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 86
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 87
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 88
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 89
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 90
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.
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