CTFA CANNON STUDY
GUIDE QUESTIONS AND
CORRECT ANSWERS
GRADED A+ 2025-2026
Diversification - ANS-Most effective way to reduce risk in a portfolio
Common Stockholders - ANS-Who benefits the most in a highly leveraged company
during periods of rising profits
Federal level ONLY. EXEMPT from State and Local level. - ANS-What level are Treasury
Securities taxed at?
Municipal Bonds - ANS-What can Pooled Income Funds NOT invest in
Bonds - ANS-A widow, 75 years old, with no heirs wants stable income with little risk
should have a portfolio constructed mostly of what?
Common Stock - ANS-What has provided the highest return over the past 50 years
Growth Stocks - ANS-Exhibit high PE Ratios, Low Dividend Yields, high price volatility
Food, beverage, toiletries - ANS-Defensive stocks include
The companies Board of Directors - ANS-Who determines and declares a companies
dividends
, Corporate Bonds - ANS-What pays a high yield compared to Treasury or Agency Bonds?
appreciating; lower - ANS-When exchange rates of foreign currencies increases it
means the foreign currency is _____________and the cost of US made goods in that
country will be _____________
Money-Market Funds - ANS-Possesses HIGH liquidity and HIGH marketability VERY low
risk investment option?
Gold and Real Estate - ANS-What is a good inflation hedge in a portfolio
preferred stock - ANS-stock that entitles the holder to a fixed dividend, whose dividend
payment takes priority over that of common-stock dividends. No voting rights.
systemic risk - ANS-Type of Risk that CANNOT be diversified away
Debt Coverage - ANS-A corporate bonds safety is best measured by its
Time - ANS-What is the single most important variable in deciding on a risk level?
Sell; Raise - ANS-When the Federal Reserve Board (FRB) CONTRACTS the money supply
it would _____________ securities and _____________ reserves.
Cumulative Preferred Stock - ANS-What kind of stock is entitled to dividends in
arrears?
Coupon rate - ANS-Yield to maturity for a bond selling at a DISCOUNT is higher than
its _____________
Government National Mortgage Association (GNMA) (Ginnie Mae Pass Through) - ANS-
_____________________securities earn income from the interest and principal payments
GUIDE QUESTIONS AND
CORRECT ANSWERS
GRADED A+ 2025-2026
Diversification - ANS-Most effective way to reduce risk in a portfolio
Common Stockholders - ANS-Who benefits the most in a highly leveraged company
during periods of rising profits
Federal level ONLY. EXEMPT from State and Local level. - ANS-What level are Treasury
Securities taxed at?
Municipal Bonds - ANS-What can Pooled Income Funds NOT invest in
Bonds - ANS-A widow, 75 years old, with no heirs wants stable income with little risk
should have a portfolio constructed mostly of what?
Common Stock - ANS-What has provided the highest return over the past 50 years
Growth Stocks - ANS-Exhibit high PE Ratios, Low Dividend Yields, high price volatility
Food, beverage, toiletries - ANS-Defensive stocks include
The companies Board of Directors - ANS-Who determines and declares a companies
dividends
, Corporate Bonds - ANS-What pays a high yield compared to Treasury or Agency Bonds?
appreciating; lower - ANS-When exchange rates of foreign currencies increases it
means the foreign currency is _____________and the cost of US made goods in that
country will be _____________
Money-Market Funds - ANS-Possesses HIGH liquidity and HIGH marketability VERY low
risk investment option?
Gold and Real Estate - ANS-What is a good inflation hedge in a portfolio
preferred stock - ANS-stock that entitles the holder to a fixed dividend, whose dividend
payment takes priority over that of common-stock dividends. No voting rights.
systemic risk - ANS-Type of Risk that CANNOT be diversified away
Debt Coverage - ANS-A corporate bonds safety is best measured by its
Time - ANS-What is the single most important variable in deciding on a risk level?
Sell; Raise - ANS-When the Federal Reserve Board (FRB) CONTRACTS the money supply
it would _____________ securities and _____________ reserves.
Cumulative Preferred Stock - ANS-What kind of stock is entitled to dividends in
arrears?
Coupon rate - ANS-Yield to maturity for a bond selling at a DISCOUNT is higher than
its _____________
Government National Mortgage Association (GNMA) (Ginnie Mae Pass Through) - ANS-
_____________________securities earn income from the interest and principal payments
