Question
6) Which of the following statements accurately describes the back-office treasury t talesal the overall treasury function of a financial institution? A. It primarily focuses on customer relationship management. B. It is responsible for strategic decision-making. C. It ensures accurate and efficient processing of financial transactions. D. It handles market research and analysis. 7) Which of the following is a disadvantage of having a centralized treasury department in a large international group of companies? A. The local staff may not get expertise in treasury management B. Necessary borrowings can be arranged in bulk, at keener interest rates than for smaller amounts. C. The group's foreign currency risk can be managed much more effectively since they can appreciate the total exposure situation. D. Local operating units should have a better feel for local conditions than head office and can respond more quickly to local developments.
Ask by Hammond Haynes. in Saudi Arabia
Mar 09,2025
Upstudy AI Solution
Tutor-Verified Answer
Answer
- **Question 6:** C. It ensures accurate and efficient processing of financial transactions.
- **Question 7:** A. The local staff may not get expertise in treasury management.
Solution
Let's analyze each question step by step.
### Question 6: Back-office Treasury Function
We need to identify which statement accurately describes the back-office treasury function of a financial institution.
- **A. It primarily focuses on customer relationship management.**
- This statement is incorrect. Customer relationship management is typically a function of the front office, not the back office.
- **B. It is responsible for strategic decision-making.**
- This statement is also incorrect. Strategic decision-making is usually the responsibility of senior management and the front office.
- **C. It ensures accurate and efficient processing of financial transactions.**
- This statement is correct. The back office is primarily responsible for the processing and settlement of transactions, ensuring accuracy and efficiency.
- **D. It handles market research and analysis.**
- This statement is incorrect. Market research and analysis are generally part of the front office functions.
**Final Answer for Question 6: C. It ensures accurate and efficient processing of financial transactions.**
### Question 7: Disadvantage of Centralized Treasury Department
We need to identify the disadvantage of having a centralized treasury department in a large international group of companies.
- **A. The local staff may not get expertise in treasury management.**
- This statement is a valid disadvantage. Centralization can limit local staff's exposure to treasury management practices.
- **B. Necessary borrowings can be arranged in bulk, at keener interest rates than for smaller amounts.**
- This statement is an advantage of centralization, not a disadvantage.
- **C. The group's foreign currency risk can be managed much more effectively since they can appreciate the total exposure situation.**
- This statement is also an advantage of centralization, as it allows for better risk management.
- **D. Local operating units should have a better feel for local conditions than head office and can respond more quickly to local developments.**
- This statement highlights a disadvantage of centralization, as local units may be more attuned to local conditions and able to respond more quickly.
**Final Answer for Question 7: A. The local staff may not get expertise in treasury management.**
In summary:
- **Question 6 Answer:** C
- **Question 7 Answer:** A
Answered by UpStudy AI and reviewed by a Professional Tutor
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Simplify this solution Beyond the Answer
The back-office treasury function plays a crucial role in managing the financial processes and ensuring that all transactions run smoothly within a financial institution. This part of the treasury focuses on the behind-the-scenes work, such as reconciliation, compliance, and maintaining records, making sure that everything aligns perfectly before it sees the light of day. On a different note, centralized treasury departments can sometimes face challenges, especially in large international groups. While they can effectively manage risks and streamline processes, local staff may miss out on the hands-on experience and insights that come from managing treasury functions at the local level. This can lead to decisions that are less informed about specific regional dynamics, which can be a disadvantage in a rapidly changing market landscape.
