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CTFA PRACTICE EXAM 1 QUESTIONS WITH COMPLETE SOLUTIONS.
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CTFA PRACTICE EXAM 1 QUESTIONS WITH COMPLETE SOLUTIONS.
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CTFA PRACTICE EXAM 1 QUESTIONSWITH COMPLETE SOLUTIONS
Q. zWhich zof zthe zfollowing ztypes zof ztrusts zcan zuse zthe zUniform zPrincipal zand
zIncome zAct zpower zto zadjust z? z
A. zGRAT z
B. zTrust zunder zwill z
C. zRevocable ztrust z
D. zCharitable zlead ztrust z- z✔✔Solution z: zThe zcorrect zanswer zis zB.
Q. zWhich zof zthe zfollowing zis za zpower zof zattorney zfor zproperty zthat zis zeffective
zupon zexecution zand zdoes zNOT zterminate zupon zthe zprincipal's zincapacity?
A. zGeneral
B. zSpringing
C. zDurable
D. zLimited z- z✔✔Solution: zThe zcorrect zanswer zis zC
Q. zA zclient zborrows z$ z100,000 z, zand zuses zthe zproceeds zto zpurchase z$ z75,000 zin
zequities zand z$ z25,000 zin ztax z- zexempt zbonds z. zThe zinterest zon zthe zloan zis z: z
A. zNot zdeductible zbecause zit zis ztainted zby zthe zpurchase zof ztax z- zexempt zbonds zB.
zNot zdeductible zbecause zit zis zconsidered zpersonal zinterest z
C. zDeductible zto zthe zextent zof zinvestment zincome zafter zproper zallocation zbetween
ztaxable zand ztax zexempt zincome z
D. zDeductible zin zfull zas zinvestment zinterest z- z✔✔Solution z: zThe zcorrect zanswer zis
zC.
Q. zWhat zis zthe zBEST zreason zto zinclude zinternational zsecurities zin za zportfolio zof
zexisting zstocks zand zbonds z? z
A. zDecrease zdiversification z
B. zLikely zimprove zdiversification
C. zLikely zincrease zportfolio zvolatility z
D. zImprove ztax zefficiency z- z✔✔Solution z: zThe zcorrect zanswer zis zB.
Q. zA ztransfer zof za zprivate zfoundation's zincome zor zassets zto z, zor zfor z, zthe zbenefit
zof za zdisqualified zperson z, zis zsubject zto za zpenalty zexcise ztax zas z: z
A. zA ztaxable zexpenditure z. z
B. zAn zact zof zself z- zdealing z. z
C. zProhibited zdistribution z. z
D. zUnrelated zbusiness zincome z. z- z✔✔Solution z: zThe zcorrect zanswer zis zB.
, Q. zA zclient zwants zto zbe zcertain zthat zhis zfamily ztrust zwill zbe zadministered zby zyou z,
zas zthe ztrust zadvisor z. zAccordingly z, zwhich zof zthe zfollowing zis zappropriate ztext zfor
zthe ztrust zinstrument z? z
A. zThe ztrust zadvisor zshall zadminister zany ztrust zcreated zhereunder z
B. zA zmajority zof zadult zbeneficiaries zcan ztransfer zthe ztrust zto zanother zcorporate
zfiduciary z
C. zFunding zof zthe ztrust zwill znot ztake zplace zunless z( zYOUR zNAME z) zis zthe
zassigned ztrust zadvisor z
D. zThe zgrantor z/ ztestator zwishes zthe ztrust zadvisor zto zbe zthe zadministrator
zassigned zto zthe zfamily ztrust z, zas zmay zbe zpracticable z- z✔✔Solution z: zThe zcorrect
zanswer zis zD.
Q. zA zcentral zgoal zof zmodern zportfolio ztheory zis zto z: z
A. zLimit zthe zuse zof zrisky zinvestments z
B. zManage zportfolio zvolatility zand zrisk zthrough zdiversification z
C. zEncourage zthe zsystematic zevaluation zof za zportfolio zon zan zasset z- zby z- zasset
zbasis z
D. zAcknowledge zthat zthe zuse zof zprudent zinvestments zis zmore zcritical zto zportfolio
zperformance zthan za zconsideration zof zinflation zor zmarket zrisk z- z✔✔Solution z: zThe
zcorrect zanswer zis zB.
Q. zA zclient zreceived za z$ z15,000 zbonus zand zwould zlike zto zuse zthe zmoney zfor za
zdown zpayment zon za znew zhouse zin za zyear z. zWhich zof zthe zfollowing zis zthe zMOST
zappropriate zinvestment zapproach z? z
A. zBuy za z5 z- zyear z, zAAA z- zrated zmunicipal zbond z
B. zPurchase za z52 z- zweek zU.S. zTreasury zbill z
C. zInvest zin zan zS z& zP z500 zindexed zmutual zfund z
D. zInvest zin za zblue z- zchip zcompany zcommon zstock zcovered zcall z- z✔✔Solution z:
zThe zcorrect zanswer zis zB.
Q. zTwo zsibling zclients zwill zeach zinherit za zone z- zhalf zremainder zinterest zin ztheir
zfather's ztestamentary ztrust z, zprovided zthat zthey zsurvive ztheir zmother z, zthe zcurrent
zbeneficiary z. zIf zneither zsibling zsurvives ztheir zmother z, zthen zthe zremainder zinterest
zwill zpass zto zthe zsiblings z' zchildren zper zstirpes z. zWith zthis zarrangement z, zif zone zof
zthe zsiblings zplans zto zdisclaim ztheir zinterest z, zwho zwould zreceive zthat zdisclaimed
zinterest z? z
A. zThe zother zsibling z
B. zThe zmother z
C. zThe zdisclaiming zsibling's zchildren z
D. zThe zfather's zresiduary zestate z- z✔✔Solution z: zThe zcorrect zanswer zis zC.
Q. zA zclient zrecently zpassed zaway zand zall zpersonal zproperty zis zto zbe zsold zat za
zpublic zauction z. zThe ztrust zadvisor zfor zthe zclient's zrevocable ztrust zasks za zfriend zto
zattend zthe zauction zand zbid zon za zlamp z. zThe zfriend's zbid zis zsuccessful zand zthe
ztrust zadvisor zbuys zthe zlamp zfrom zthe zfriend zfor zthe zauction zprice z. zWhich zof zthe
zfollowing zbreaches zof zethics zhas zoccurred z? z
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