Certified Treasury Professional Exam Foreign Exchange and International Treasury

Question 1

Which foreign exchange market structure accounts for the largest daily trading volume globally?

Accepted Answer

Spot market

Answer

Forward market

Answer

Futures market

Answer

Options market

Question 2

A U.S. company expects to receive €2,000,000 in 90 days and wants to lock in the exchange rate. Which instrument is most appropriate?

Accepted Answer

Forward contract

Answer

Currency swap

Answer

Interest rate cap

Answer

Cross-currency basis swap

Question 3

What does a negative basis in the cross-currency basis swap market typically indicate?

Accepted Answer

Excess USD demand relative to other currencies

Answer

Excess supply of USD in offshore markets

Answer

Rising domestic interest rates

Answer

Declining forward premiums

Question 4

Which method of FX exposure is associated with the translation of foreign subsidiary financial statements into the parent company's reporting currency?

Accepted Answer

Translation exposure

Answer

Transaction exposure

Answer

Economic exposure

Answer

Operational exposure

Question 5

Under the CTP exam framework, which hedging ratio approach adjusts the hedge position dynamically as market conditions change?

Accepted Answer

Delta hedging

Answer

Static hedging

Answer

Proxy hedging

Answer

Natural hedging

Question 6

A U.S. treasury team uses leading and lagging of intercompany payments to manage FX risk. Lagging a payable denominated in a foreign currency that is expected to depreciate means:

Accepted Answer

Delaying payment to pay less in USD terms later

Answer

Paying early to benefit from current rates

Answer

Converting excess cash immediately

Answer

Entering a forward to buy the foreign currency