CTFA STUDY TEST
QUESTIONS AND
CORRECT ANSWERS
GRADED A+ 2025-2026
What is a J curve - ANS-The return pattern of private equity funds. The cumulative
return is negative in the early life of a bond before turning positive. This is because in
the early life of a private equity fund there are expenses incurred in the search for
attractive investments but there are not any investments to generate returns.
True or false? Private equity investing is an excellent source of liquidity. - ANS-False.
Since private equity is not traded on any market, and investor should be prepared to
have no access to their money for an extended period of time example term of 10 to 12
years.
How often are hedge fund incentive fees paid? - ANS-Annually
How often are private equity fund incentive fees paid? - ANS-When the investments are
actually sold at a profit.
What is a closely held corporation? - ANS-A corporation for which more than 50% of
the value of its outstanding stock is owned by five or fewer individuals. There are
generally no public investors in a closely held corporation.
What are the primary components of the A-B estate plan? - ANS-The marital deduction.
Credit shelter trust.
What are the two trust commonly used under the A - B estate plan called? - ANS-The
credit shelter trust.
, The marital deduction trust.
Why are the assets in a marital deduction trust tax deferred? - ANS-Because the assets
utilize the unlimited marital deduction.
True or false. While the assets of the marital deduction trust utilize the unlimited
marital deduction, the assets remaining in the marital trust at the surviving spo use's
death are not included in and taxed as part of the surviving spouse's estate. - ANS-
False. They are included in the surviving spouse's estate.
What is the primary purpose of the credit shelter trust? - ANS-It is designed to pass
family wealth, ultimately to one's descendants, while also making trust property
available to the descendants surviving spouse during the spouses lifetime.
True or false? During the life of the surviving spouse, the credit shelter trust may
provide for mandatory distributions of income, or it may give the trustee discretion
when determining how much, if any, of the trust income and principal is to be
disturbed. - ANS-True.
What is a spray or sprinkling trust? - ANS-I spray provision generally gives the trustee
the right to retain income in the trust what you divide income among the settlers
spouse and descendants as the trustee determines advisable for their health support
and reasonable comfort and education.
The Bretton Woods system led to the creation of what to entities? - ANS-The Bretton
Woods system led the creation of the international monetary fund (IMF) and the
international Bank for Reconstruction and Development now known as the World Bank.
What was the original purpose of the international monetary fund? - ANS-The
international monetary fund was designed to monitor exchange rates and lend reserve
currencies to nations with trade deficits.
What was the purpose of the World Bank? - ANS-To provide underdeveloped nations
with needed capital.
The equation VO=D1 (K-G) assumes which of the following?
QUESTIONS AND
CORRECT ANSWERS
GRADED A+ 2025-2026
What is a J curve - ANS-The return pattern of private equity funds. The cumulative
return is negative in the early life of a bond before turning positive. This is because in
the early life of a private equity fund there are expenses incurred in the search for
attractive investments but there are not any investments to generate returns.
True or false? Private equity investing is an excellent source of liquidity. - ANS-False.
Since private equity is not traded on any market, and investor should be prepared to
have no access to their money for an extended period of time example term of 10 to 12
years.
How often are hedge fund incentive fees paid? - ANS-Annually
How often are private equity fund incentive fees paid? - ANS-When the investments are
actually sold at a profit.
What is a closely held corporation? - ANS-A corporation for which more than 50% of
the value of its outstanding stock is owned by five or fewer individuals. There are
generally no public investors in a closely held corporation.
What are the primary components of the A-B estate plan? - ANS-The marital deduction.
Credit shelter trust.
What are the two trust commonly used under the A - B estate plan called? - ANS-The
credit shelter trust.
, The marital deduction trust.
Why are the assets in a marital deduction trust tax deferred? - ANS-Because the assets
utilize the unlimited marital deduction.
True or false. While the assets of the marital deduction trust utilize the unlimited
marital deduction, the assets remaining in the marital trust at the surviving spo use's
death are not included in and taxed as part of the surviving spouse's estate. - ANS-
False. They are included in the surviving spouse's estate.
What is the primary purpose of the credit shelter trust? - ANS-It is designed to pass
family wealth, ultimately to one's descendants, while also making trust property
available to the descendants surviving spouse during the spouses lifetime.
True or false? During the life of the surviving spouse, the credit shelter trust may
provide for mandatory distributions of income, or it may give the trustee discretion
when determining how much, if any, of the trust income and principal is to be
disturbed. - ANS-True.
What is a spray or sprinkling trust? - ANS-I spray provision generally gives the trustee
the right to retain income in the trust what you divide income among the settlers
spouse and descendants as the trustee determines advisable for their health support
and reasonable comfort and education.
The Bretton Woods system led to the creation of what to entities? - ANS-The Bretton
Woods system led the creation of the international monetary fund (IMF) and the
international Bank for Reconstruction and Development now known as the World Bank.
What was the original purpose of the international monetary fund? - ANS-The
international monetary fund was designed to monitor exchange rates and lend reserve
currencies to nations with trade deficits.
What was the purpose of the World Bank? - ANS-To provide underdeveloped nations
with needed capital.
The equation VO=D1 (K-G) assumes which of the following?
