Preview Questions Treasury Manager | Role Specific Skill

Question 1: How does the duration of a bond portfolio affect its risk profile during interest rate changes?

Which action should you take?

Choose only one option

Longer duration reduces interest rate risk

Duration does not affect the risk of a bond portfolio

Shorter duration increases sensitivity to interest rate changes

Longer duration increases sensitivity to interest rate changes

Question 2: What does the term ?tail risk? refer to in risk management?

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The risk associated with daily fluctuations in market prices

The risk of regulatory changes affecting a portfolio's performance

The risk related to the average performance of an asset class

The risk of extreme losses in rare market events

Question 3: What is the most effective strategy for mitigating liquidity risk in a treasury portfolio?

Which action should you take?

Choose only one option

Increasing the portfolio's exposure to short-term instruments

Reducing the duration of long-term assets

Diversifying across asset classes

Holding a larger portion of the portfolio in cash

Question 4: When reporting on treasury liquidity, which financial statement is primarily used to assess the liquidity position of an entity?

Which action should you take?

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The cash flow statement

The balance sheet

The income statement

The statement of shareholders' equity

Question 5: In the context of risk mitigation, which of the following derivative instruments is most commonly used to hedge against foreign exchange risk?

Which action should you take?

Choose only one option

Currency forwards

Equity options

Commodity futures

Credit default swaps

Question 6: What is the effect of a significant increase in a bank's receivables aging on its cash flow forecast?

Which action should you take?

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It improves cash flow by accelerating collections

It reduces the bank's credit risk

It has no effect on cash flow

It decreases cash flow availability and raises collection risk