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Free CTP Practice Questions

10 free, exam-style Certified Treasury Professional (CTP) (CTP) practice questions with answers and explanations. No signup required. Work through them below, then take the full free CTP practice test to study every exam domain.

Question 1

Which of the following short-term investment instruments is issued at a discount and backed by the full faith and credit of the U.S. government?

  1. Commercial paper
  2. Negotiable certificates of deposit
  3. Treasury bills
  4. Banker's acceptances
Show answer & explanation

Correct answer: C - Treasury bills

Question 2

Commercial paper is BEST described as:

  1. A secured short-term debt instrument issued by banks
  2. An unsecured short-term promissory note issued by corporations with strong credit ratings
  3. A government-guaranteed discount instrument with maturities up to one year
  4. A negotiable time deposit issued by commercial banks
Show answer & explanation

Correct answer: B - An unsecured short-term promissory note issued by corporations with strong credit ratings

Question 3

A treasury professional is evaluating a repurchase agreement (repo) as an overnight investment. Which of the following BEST describes why repos are considered relatively low risk?

  1. They are guaranteed by the FDIC up to applicable limits
  2. They are backed by collateral, typically government securities
  3. They carry an implicit government guarantee through the Federal Reserve
  4. They are only offered by investment-grade financial institutions
Show answer & explanation

Correct answer: B - They are backed by collateral, typically government securities

Question 4

A banker's acceptance is BEST described as a:

  1. Demand deposit instrument used for domestic transactions
  2. Time draft drawn on and accepted by a bank, typically used in international trade
  3. Short-term unsecured promissory note issued by a corporation
  4. Government security sold at a discount from face value
Show answer & explanation

Correct answer: B - Time draft drawn on and accepted by a bank, typically used in international trade

Question 5

Which of the following is a key regulatory requirement for money market mutual funds in the United States?

  1. All money market funds must maintain a stable $1.00 NAV
  2. Money market funds must comply with SEC Rule 2a-7
  3. Money market funds are required to invest exclusively in government securities
  4. Money market funds must be FDIC insured
Show answer & explanation

Correct answer: B - Money market funds must comply with SEC Rule 2a-7

Question 6

Agency securities issued by government-sponsored enterprises (GSEs) such as the Federal Home Loan Bank (FHLB) typically offer:

  1. The same yield as U.S. Treasury securities of the same maturity
  2. Higher yields than comparable Treasuries due to a slightly higher perceived credit risk
  3. FDIC insurance protection up to applicable limits
  4. Tax-exempt interest income at both federal and state levels
Show answer & explanation

Correct answer: B - Higher yields than comparable Treasuries due to a slightly higher perceived credit risk

Question 7

All of the following are characteristics of negotiable certificates of deposit (CDs) EXCEPT:

  1. They are issued by commercial banks
  2. They can be traded in the secondary market before maturity
  3. They are always issued at a discount from face value
  4. They pay interest at maturity or periodically
Show answer & explanation

Correct answer: C - They are always issued at a discount from face value

Question 8

A corporation wants to invest excess cash in a tax-advantaged instrument. Which of the following would provide tax-exempt interest income?

  1. Treasury bills
  2. Commercial paper
  3. Municipal securities
  4. Negotiable CDs
Show answer & explanation

Correct answer: C - Municipal securities

Question 9

Which type of money market fund invests primarily in corporate debt instruments and bank obligations, and may impose liquidity fees or redemption gates during periods of stress?

  1. Government money market fund
  2. Treasury money market fund
  3. Prime money market fund
  4. Tax-exempt money market fund
Show answer & explanation

Correct answer: C - Prime money market fund

Question 10

A banker's acceptance is referred to as 'two-name paper' because:

  1. It requires signatures from two corporate officers
  2. Both the drawer (importer) and the accepting bank are obligated to pay
  3. It must be endorsed by two separate financial institutions
  4. The instrument is split into two separate payment obligations
Show answer & explanation

Correct answer: B - Both the drawer (importer) and the accepting bank are obligated to pay

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