Preview Questions Treasury Manager | Role Specific Skill

Question 1: What is the key difference between forecasting and budgeting in financial planning for treasury operations?

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Budgeting is used exclusively for capital projects, while forecasting is for operations

Budgeting is more accurate than forecasting

Forecasting is for long-term projections, while budgeting is for short-term projections

Forecasting involves estimating revenues, while budgeting focuses on expenses

Question 2: In managing cash flow, what is the most significant risk associated with overreliance on short-term financing?

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Increased interest payments

Potential reduction in credit ratings

Exposure to refinancing risks

Reduced flexibility in operations

Question 3: Which risk management technique is most suitable for mitigating liquidity risk in a treasury portfolio?

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Using derivatives to hedge risk

Maintaining a liquidity buffer in cash or cash equivalents

Concentrating investments in illiquid assets

Increasing the duration of the portfolio

Question 4: What is a common method used by Treasury Managers to optimize cash flow in the BFSI sector?

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Maintaining high levels of cash reserves

Cash concentration management

Investing in short-term bonds

Hedging foreign currency risk

Question 5: In a scenario of tight liquidity, which financial instrument should a Treasury Manager prioritize for managing cash flow?

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Government bonds for long-term investments

Equity issuance for raising capital

High-yield savings accounts for cash reserves

Commercial paper or short-term bank loans

Question 6: When managing cash flow for a bank, what is the ideal strategy for managing short-term liquidity gaps?

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Borrowing from interbank markets

Selling long-term securities

Increasing reserves held in cash

Postponing loan disbursements