Current Asset Management and Short-Term Financing

CHAPTER 19
Current Asset Management and Short-Term Financing

EASY (definitional)

19.1 Most U.S. international dollar payments are made via
a) Bankwire
b) CHIPS
c) FedWire
d) SWIFT

Ans: b
Section: Collection and disbursement of funds
Level: Easy

19.2 One of the cash manager’s greatest problems is that __________ wire transfers do not always operate with great efficiency globally.
a) bank-to-bank
b) subsidiary-to-subsidiary
c) U. S. bank
d) U.K. bank

Ans: a
Section: Collection and disbursement of funds
Level: Easy

19.3 Which of the following is NOT an advantage of a centralized international cash management program?
a) Pools of excess liquidity are eliminated
b) Financing costs can be reduced
c) Information at the level of the operating unit is better utilized
d) Cash management is decentralized

Ans: d
Section: Organization
Level: Easy

19.4 Since a large percentage of multinational fund transfers are subsidiary-to-subsidiary, the payoff from __________ can be large.
a) wire transfers
b) multiple bank accounts
c) multilateral netting
d) local cash management

Ans: c
Section: Bilateral and multilateral netting
Level: Easy

19.5 Treasurers of multinationals will likely demand more cash management services when
a) foreign exchange markets are relatively calm
b) foreign exchange transactions costs rise
c) inflation rates are relatively low
d) telecommunications costs rise

Ans: b
Section: Collection and disbursement of funds
Level: Easy

19.6 Firms can minimize delays in receipt of payments and in conversion of payments into cash but NOT by using
a) SWIFT
b) wire transfers
c) cash pooling
d) mobilization centers

Ans: c
Section: Collection and disbursement of funds
Level: Easy

19.7 Which of the following factors would NOT add value to centralized cash management?
a) tax differentials across countries
b) violations of interest rate parity
c) differences between borrowing and lending rates