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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 121
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.
Question 122
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 123
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 124
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 125
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.
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Question 126
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 127
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 128
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 129
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 130
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 131
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 132
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 133
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.
Question 134
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 135
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 136
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 137
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 138
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 139
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 140
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 141
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 142
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 143
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.
Question 144
Why is a strong relationship between treasury and the IT department important?
Select an option first.
Correct answer: D — IT supports treasury systems, connectivity, data integration, and cybersecurity
Explanation: IT provides the infrastructure, integrations, and security that treasury systems depend on, including TMS deployment, bank connectivity, and protection against cyber threats. Effective collaboration ensures reliable, secure treasury operations.
Question 145
Treasury coordinates with the tax function primarily to address issues such as:
Select an option first.
Correct answer: B — Cross-border cash movements, withholding taxes, and the tax efficiency of funding structures
Explanation: Tax implications heavily influence intercompany funding, repatriation of cash, withholding on cross-border flows, and the structuring of financing and pooling arrangements. Treasury and tax must coordinate so cash strategies are tax-efficient and compliant.
Question 146
Treasury supports the internal audit function by:
Select an option first.
Correct answer: D — Providing documentation of controls and cooperating in reviews of treasury processes
Explanation: Treasury provides internal audit with access to processes, controls documentation, and records so audit can independently assess control effectiveness and compliance. This cooperation strengthens governance and helps identify and remediate control weaknesses.
Question 147
Treasury frequently partners with payroll to ensure that:
Select an option first.
Correct answer: B — Sufficient funded balances and appropriate accounts are in place to meet payroll disbursement obligations on time
Explanation: Payroll represents a large, time-sensitive recurring disbursement, so treasury must ensure funds are available and the right accounts and payment methods are in place to meet each payroll cycle. Coordination prevents shortfalls and failed or late payments.
Question 148
A company pays $500,000 in total annual banking fees across all its banks. Bank X receives $200,000 of that total. What is Bank X's share of wallet?
Select an option first.
Correct answer: D — 40%
Explanation: Share of wallet equals the fees paid to a specific bank divided by total banking fees: $200,000 / $500,000 = 0.40, or 40%. Banks track share of wallet to judge whether the ancillary business they receive justifies the credit and services they extend.
Question 149
In an RFP evaluation, Bank A scores 8 on price (weighted 40%), 6 on service (weighted 30%), and 9 on technology (weighted 30%). What is Bank A's total weighted score?
Select an option first.
Correct answer: B — 7.7
Explanation: The weighted score is (8 x 0.40) + (6 x 0.30) + (9 x 0.30) = 3.2 + 1.8 + 2.7 = 7.7. Weighted scoring lets a treasury combine multiple criteria with differing importance into a single comparable number across bidders.
Question 150
Provider A offers a flat $2,750 per month. Provider B charges a $2,000 base fee plus $0.04 per item; the company processes 25,000 items monthly. Which provider is cheaper, and by how much per month?
Select an option first.
Correct answer: C — Provider A, by $250
Explanation: Provider B's cost = $2,000 + (25,000 x $0.04) = $2,000 + $1,000 = $3,000, while Provider A is a flat $2,750. Provider A is therefore cheaper by $3,000 - $2,750 = $250 per month. At this volume the flat fee beats the base-plus-per-item structure.
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