A company may choose to use a derivative to reduce risk on which of the following types of exposure?
I. Currency
II. Interest rate
III.
Commodity price

• A.I, II, and III
• B.II and III only
• C.I and II only
• D.I and III only

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With the advent of the euro, many U.S. companies have seen a reduction in their number of foreign currency transactions. As a result, these U.S. companies have benefited from which of the following?
I. Reduced FX transaction costs
II. Consolidated banking relationships
III. Simplified exchange risk management
IV. Reduced need to monitor foreign political climates

• A.II and III
• B.I, III, and IV
• C.I, II, and III
• D.I and II

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Which of the following would be MOST suitable for a risk-averse electronics manufacturer that uses copper in many of its components?

• A.A short position in copper futures
• B.A floor option on copper futures
• C.A put option on copper futures
• D.A costless collar using options on copper futures

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The treasury analyst at RST Corporation has been asked to forecast cash levels for the company's year-end balance sheet. The analyst has been given the following information: What should the analyst project as the upcoming year-end cash balance?

• A.$74 million
• B.$50 million
• C.$39 million
• D.$47 million

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A manufacturing company selling engines and other mechanical equipment, with invoices averaging $15,000, would use which of the following systems?

• A.Over-the-counter collections in numerous locations; deposits to field banks
• B.A wholesale lockbox with multiple deposit points
• C.A company processing center; deposits to nearby bank(s)
• D.A retail lockbox with multiple deposit points

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