CANNON CTFA PREP EXAM WITH
CORRECT ACTUAL QUESTIONS AND
CORRECTLY WELL DEFINED ANSWERS
LATEST ALREADY GRADED A+
The "conduit theory" for a regulated investment company
says which of the following?
A. the flow of revenues should be unimpeded by
redemptions.
B. investment income flows to the investor after taxes.
C. the investor and the fund are taxed as a single entity.
D. the investment income is taxable to the investor only.
D. the investment income is taxable to the investor only.
If interest rates are expected to decline, which of the
following bonds would offer the greatest potential for price
appreciation?
A. Treasury bond with duration of 15 years
B. Treasury bond with duration of 12 years
,C. Treasury bond maturing in 10 years
D. Treasury bond maturing in 15 years
A. Treasury bond with duration of 15 years
Absent any relevant language in the instrument, under
common law a trust is considered to be which of the
following?
A. irrevocable and not amendable
B. irrevocable but amendable
C. revocable but not amendable
D. revocable and amendable
A. irrevocable and not amendable
In a Qualified Terminable Interest Property (QTIP) marital
trust, the surviving spouse may be given various powers of
appointment. Which of the following may be included for
the surviving spouse to have maximum control available as
a beneficiary of a QTIP while retaining election options for
the executor?
A. only limited powers of appointment
B. limited powers and the 5x5 power
C. only general powers of appointment, except the 5x5
power
D. general powers including the 5x5 power
B. limited powers and the 5x5 power
,At the death of a decendent, the decedent's will creates a
trust paying all income to the surviving spouse and permits
principal encroachment, at the trustee's discretion, for
benefit of the surviving spouse and/or children during the
surviving spouse's lifetime. Which of the following is true of
this arrangement?
A. The trust can qualify for the QTIP election.
B. The trust can not qualify for the QTIP election.
C. The trust will not be included in the gross estate of the
decendent.
D. The trust is invalid since a will cannot creat a trust.
B. The trust can not qualify for the QTIP election.
A will provides as follows: "If the settlor's spouse survives
the settlor, then at the settlor's death the trustee shall
retain and administer as the FAMILY TRUST an amount equal
to the maximum dollar amount which, without considering
the federal estate tax marital deduction in effect at the time
of settlor's death, can pass from the settlor's gross estate
free of federal estate taxation, taking into consideration the
value of all available credits against estate tax and all
taxable transfers which pass outside of this article." This is
an example of which kind of funding clause?
A. marital pecuniary
B. reverse pecuniary
, C. pro rata fractional
D. "pick & choose" fractional
B. reverse pecuniary
Which of the following powers of appointment best
describes the right granted to a beneficiary under a
Crummey trust provision?
A. Limited
B. Ascertainable standard
C. General
D. Testamentary
C. General
Which of the following is TRUE with respect to general
powers of appointment?
I. All general powers of appointment are similar to outright
ownership of property.
II. All general powers of appointment allow the power
holder to appoint the assets to his creditors.
III. All general powers of appointment have transfer tax
consequences.
A. I and III
B. II only
C. II and III
D. III only
CORRECT ACTUAL QUESTIONS AND
CORRECTLY WELL DEFINED ANSWERS
LATEST ALREADY GRADED A+
The "conduit theory" for a regulated investment company
says which of the following?
A. the flow of revenues should be unimpeded by
redemptions.
B. investment income flows to the investor after taxes.
C. the investor and the fund are taxed as a single entity.
D. the investment income is taxable to the investor only.
D. the investment income is taxable to the investor only.
If interest rates are expected to decline, which of the
following bonds would offer the greatest potential for price
appreciation?
A. Treasury bond with duration of 15 years
B. Treasury bond with duration of 12 years
,C. Treasury bond maturing in 10 years
D. Treasury bond maturing in 15 years
A. Treasury bond with duration of 15 years
Absent any relevant language in the instrument, under
common law a trust is considered to be which of the
following?
A. irrevocable and not amendable
B. irrevocable but amendable
C. revocable but not amendable
D. revocable and amendable
A. irrevocable and not amendable
In a Qualified Terminable Interest Property (QTIP) marital
trust, the surviving spouse may be given various powers of
appointment. Which of the following may be included for
the surviving spouse to have maximum control available as
a beneficiary of a QTIP while retaining election options for
the executor?
A. only limited powers of appointment
B. limited powers and the 5x5 power
C. only general powers of appointment, except the 5x5
power
D. general powers including the 5x5 power
B. limited powers and the 5x5 power
,At the death of a decendent, the decedent's will creates a
trust paying all income to the surviving spouse and permits
principal encroachment, at the trustee's discretion, for
benefit of the surviving spouse and/or children during the
surviving spouse's lifetime. Which of the following is true of
this arrangement?
A. The trust can qualify for the QTIP election.
B. The trust can not qualify for the QTIP election.
C. The trust will not be included in the gross estate of the
decendent.
D. The trust is invalid since a will cannot creat a trust.
B. The trust can not qualify for the QTIP election.
A will provides as follows: "If the settlor's spouse survives
the settlor, then at the settlor's death the trustee shall
retain and administer as the FAMILY TRUST an amount equal
to the maximum dollar amount which, without considering
the federal estate tax marital deduction in effect at the time
of settlor's death, can pass from the settlor's gross estate
free of federal estate taxation, taking into consideration the
value of all available credits against estate tax and all
taxable transfers which pass outside of this article." This is
an example of which kind of funding clause?
A. marital pecuniary
B. reverse pecuniary
, C. pro rata fractional
D. "pick & choose" fractional
B. reverse pecuniary
Which of the following powers of appointment best
describes the right granted to a beneficiary under a
Crummey trust provision?
A. Limited
B. Ascertainable standard
C. General
D. Testamentary
C. General
Which of the following is TRUE with respect to general
powers of appointment?
I. All general powers of appointment are similar to outright
ownership of property.
II. All general powers of appointment allow the power
holder to appoint the assets to his creditors.
III. All general powers of appointment have transfer tax
consequences.
A. I and III
B. II only
C. II and III
D. III only
