CPFO Treasury and Investment Management (TIM) Practice Exam

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• How is market risk defined in the context of investments?
• According to the Investment Policy Checklist for Pension Fund Assets, what is the primary determinant of investment return?
• A Separately Managed Account (SMA) provides what primary feature?
• What role does corporate governance play in ethical decision-making?
• What is the primary purpose of an investment portfolio diversification strategy?
• What is the primary benefit of investment diversification?
• Which of the following is NOT a goal of cash flow forecasting?
• What is the outcome of effective investment diversification?
• What is a primary function of treasury management systems (TMS) in public agencies?
• Why are credit ratings significant in investment decisions?
• Does GFOA recommend that governments use one bank to perform all of their banking services?
• What is one of the primary responsibilities of a treasurer in public financial management?
• What impact does credit risk have on lenders?
• What is the key attribute for a government's p-card program?
• Which statement accurately describes treasury securities?
• Which factor is critical in the selection of financial institutions for government banking?
• What should credit analysis of banks primarily consider?
• What does a liquidity ratio measure?
• Why should every investment policy include a concise statement of objectives?
• What is the purpose of cash concentration?
• Non-negotiable certificates of deposit are:
• Which type of investment management seeks to outperform the market?
• What is the role of a cash flow forecast in treasury management?
• What is the purpose of portfolio rebalancing?
• Why is capital preservation a critical strategy for investors?
• What is a significant outcome of strong corporate governance for investors?
• What type(s) of transactions reduce the chance of fraud?
• What is the primary interest rate risk concern for holders of long-term fixed income securities?
• What does an investment policy outline in public treasury management?
• Which of the following best describes the role of economic indicators?
• What does liquidity risk refer to in treasury management?
• What is the purpose of 'performance measurement' in investment management?
• What are the three main risks in an investment portfolio?
• What is the purpose of liquidity risk management in treasury operations?
• Which factor does NOT limit the value of active portfolio management for small governments?
• Who has a fiduciary duty to a government?
• Which of the following is a critical factor in building investor confidence?
• What is one key outcome of portfolio rebalancing?
• In regard to investment policies, what is an essential component?
• What is a benefit of using a bond laddering strategy?
• What is the primary goal of capital preservation in investment strategy?
• What is a common practice to ensure compliance with investment policies?
• How often should a government change the benchmark used to verify that its investment objectives are met?
• What is a potential risk associated with investing in high-yield securities?
• What is the primary advantage of a diversified investment portfolio?
• What is the primary focus of liquidity management?
• How is 'market capitalization' defined?
• How does duration affect bond investments?
• What are derivatives primarily used for in treasury management?
• Which strategy aims to align cash inflows with cash outflows?
• Which of the following methods is commonly used to forecast cash flows?
• Which of the following investment structures has the least volatility?
• What is the primary goal of financial risk management?
• What does GFOA recommend governments utilize for the safekeeping of their investments?
• What is one key benefit of good corporate governance?
• What is one key component of a treasury management system?
• What is 'regulatory compliance' in treasury management?
• Why should governments conduct cash flow forecasting?
• What does duration measure in bond investments?
• How is capital structure defined?
• What is systematic risk?
• When should governments utilize the ACH method of making payments?
• Which of the following is a common method for measuring credit risk?
• What is one characteristic of a well-structured investment policy?
• What does the 'law of one price' state regarding identical goods in investment theory?
• Which of the following factors is NOT considered when evaluating fixed-income securities?
• Cash flow forecasting is used for all of the following EXCEPT:
• Cash flow forecasts should be developed at least:
• What does the term 'arbitrage' refer to in finance?
• A wire transfer agreement with the government's bank is important because it:
• What defines 'credit risk'?
• Which metric is used to assess the effectiveness of public investment funds?
• How are repurchase agreements categorized?
• In what way does good corporate governance affect the perception of investments?
• Interest rates are generally ________ at the peak of the business cycle and beginning the retreat into recession.
• Does positive pay service from a bank help protect the account holder (government) or the person receiving funds?
• What is the role of a custodian bank in investment management?
• Credit risk can be minimized by:
• What are advantages of investing in 'exchange-traded funds' (ETFs)?
• What is the ultimate goal of effective corporate governance?
• How does managing banking relationships contribute to cash management?
• Which of the following types of investment does GFOA state that governments should exercise caution when considering or avoid altogether?
• What do foreign exchange (FX) risks primarily affect in investments?
• Where should governments check to make sure their bank/financial institution is in good standing?
• Which investment management style aims to replicate the performance of a market index?
• How do economic indicators influence investment decisions?
• In investment portfolios, what does 'diversification' mean?
• How often does GFOA recommend that governments review their financial services contract?
• In investment management, what does sustainability refer to?
• For long-term investments, which accounting method provides superior information for decision making?
• How does corporate governance influence investor confidence?
• What does the term 'yield' refer to in investment management?
• What is the role of an investment adviser with discretionary authority?
• What method does GFOA recommend governments should be encouraged to use in their receivables program?
• What does a cash position indicate for a public agency?
• What is the main risk associated with systematic risk?
• What is an impact of rising interest rates on bond portfolios?
• What is the general role of the FDIC regarding banks and financial institutions?
• What describes the relationship between fixed-income security prices and interest rates?
• Which of the following is not a consideration in interest rate swap agreements?
• What is a key advantage of using a liquidity reserve?
• What is a common motivation for governments to engage in investment risk management?
• An upward sloping yield curve is referred to as what type of yield curve?
• What is a key consideration in evaluating the effectiveness of treasury strategies?
• Why is 'due diligence' significant in investments?
• What tool does the Federal Reserve Board NOT USE to meet its goal of maximizing employment and minimizing inflation?
• What is a key characteristic of a custodian bank?
• What technique should public sector investors use to mitigate risks with securities dealers?
• Which of the following describes the impact of interest rate changes on bond prices?
• What are municipal bonds primarily used for?
• How is liquidity best defined?
• Does GFOA recommend that governments discontinue using paper checks?
• Which of the following are required to comply with the Federal Reserve Bank of New York's capital adequacy guidelines?
• Diversifying investments in a portfolio can help to reduce portfolio risk. Diversification can be achieved by all of the following EXCEPT:
• Which of the following best defines a transaction cost?
• How often should governments check with local banks to see if their entity's tax ID number is associated with any accounts?
• Which strategy can help reduce the risk of a concentrated investment?
• What does enhanced transparency in corporate governance lead to?
• According to GFOA's Sample Investment Policy, how can interest rate risk be mitigated?
• Securities lending is appropriate for which type of government approach to investment returns?
• When should a government choose a benchmark to assess their performance?
• Should the same employee be able to receive, reconcile, and deposit funds for the entity?
• What is preferred for the majority of government’s short-term borrowing?
• Which of the following investment strategies is recommended for managing a government portfolio?
• What do rating agencies expect from governments to maintain a high credit rating?
• Which of the following aspects does good corporate governance NOT directly enhance?
• When a vendor sends an email with changes to their banking information, what should a government do to confirm these changes?
• What is the most important reason to conduct cash flow forecasting?
• Which form of monetary policy involves the government's use of open market operations?
• What does 'interest rate risk' refer to?
• In comparison to similar non-callable securities, callable securities have:
• What is the primary goal of cash flow forecasting in treasury management?
• What relationship exists between corporate governance and investment value?
• In which scenario would multiple merchant ID numbers be required for a government?
• Which of these is NOT an element of good corporate governance?
• What is the main purpose of the 'Investment of Public Funds Act'?
• What is the critical first step in a government's receivables program?
• What aspect of good corporate governance can lead to higher investment attractiveness?
• What does thorough 'due diligence' entail?
• What is the main goal of liquidity management in treasury practice?
• Which investment vehicle is commonly used by public treasurers?
• Which of the following describes the impact of transaction costs on investment?
• What takes priority in cash management?
• An investment policy statement should include which of the following?
• Why is ethical behavior important in corporate governance?
• What does marking-to-market refer to in investment practice?
• A prudent reason to use reverse repurchase agreements is to:
• Why is it essential for a public treasury to maintain strong internal controls?
• Can governments charge fees to customers for allowing them to pay with a credit card?
• Which method can effectively reduce collection float?
• Which of the following is considered a benefit of chip insert transactions compared to traditional transactions?
• What does asset allocation refer to?
• Why is understanding the fiscal year important for treasury management?
• What are over-the-counter (OTC) derivatives?
• What is the definition of a 'benchmark' in investment performance?
• How can a government manage liquidity risk effectively?
• What does the term 'duration' refer to in investment management?
• Which of the following is NOT considered a passive investment strategy?
• What should be considered when selecting an investment adviser?
• What is the significance of the price-to-earnings (P/E) ratio?
• What does 'risk tolerance' signify for public treasurers?
• What does 'transfer pricing' involve?
• What does duration represent in the context of fixed income securities?
• Which of the following best describes a money market fund?
• In investment strategies, what does hedging aim to achieve?
• What is the definition of return on investment (ROI)?
• Must a government use an investment adviser as part of its portfolio management team?
• What characterizes a repossession agreement in treasury operations?
• How does corporate governance relate to accountability?
• How can transparency in corporate governance affect market perception?
• Which investment strategy is least effective in managing interest rate risk?
• What is one of the major concerns of cash management?
• Must a government accepting credit card payments be PCI compliant?
• What options should a government have associated with their bank accounts?
• What are some benefits of using purchasing cards for payments?
• Which financial instrument is typically used for short-term borrowing needs?
• Which of the following is NOT an advantage of ETFs?
• If a government accepts credit card payments in multiple locations, does it need one or several merchant identification (MID) numbers?
• Which metric is often used to evaluate a portfolio's performance?
• Which component is a key element of a cash management strategy?
• Investment grade bonds are rated by Standard and Poor's (Moody's) with which of the following designations?
• What is a common use for derivatives traded over-the-counter (OTC)?
• What key attributes are necessary when selecting a credit card vendor?
• What is one benefit of using a fixed-income investment strategy?
• What is a key objective of treasury management concerning risk?
• The practice of using delivery vs. payment (DVP) procedures when buying/selling an investment protects an investor from:
• LGIPs are generally like what type of investment?
• Typically which investment below poses the greatest volatility risk to a government investment portfolio?
• What is the primary purpose of treasury management in public finance?
• Required rates of return on U.S. Government fixed income investments account for which additional risk?
• What is the importance of Delivery-versus-payment with investment transactions?
• What is a recommended strategy for a government to manage cash flow effectively?