CANNON CTFA STUDY GUIDE 2026
COMPLETE QUESTIONS AND
VERIFIED ANSWERS
◉ Non-Qualified Deferred Compensation Answer: TCHRA:
Compensation that is not immediately taxable. It does not qualify under
ERISA for tax exemption. Taxation occurs once the individual receives
the compensation or "property"
◉ A 1035 exchange refers to a tax free exchange of... Answer: Annuities
◉ 1035 Exchange Answer: IRS allows tax-free transfer of cash values
between 2 LIKE policies (i.e. Life to Life, Annuity to Annuity, or Life to
Annuity).
◉ If a bank uses its own proprietary mutual funds for fiduciary accounts
then it should do the following (3) Answer: -Be able to substantiate the
reasonableness of using these funds
-Explain the fees associated
-Monitor the fund's investment performance
◉ A simple trust earned $27,000 in dividends. It paid $4,000 in trustee
fees. 1/2 from Income and 1/2 from P. What is the DNI? Answer:
$23,000
,◉ T/F: In a simple trust, trustee fees are deducted from DNI even the
fees that come out of Principal? Answer: True
◉ Sprinkling trust Answer: A trust in which the income or principal is
distributed among the members of a designated class in amounts and
proportions as may be determined in the discretion of the trustee or other
party. Also called spraying trust.
◉ A US dollar can buy 33 Thai Baht. What is a characteristic of the
Thai Baht? Answer: The Thai Baht is a medium f exchange to facilitate
trade and of itself has no intrinsic value.
◉ A very wealthy client created a trust that names your bank as a co-
trustee with an individual following the client's death. Upon reviewing
the trust document, you notice that the individual trustee is granted sole
and complete responsibility for all trust investment decisions. Is that
acceptable? What should you follow up with? Answer: This is ok but
you should require that trust contain broad language specifying that the
bank will be exonerated (exculpated) from any decision made individual
trustee.
◉ Al, Bob and Chuck purchased a $300,000 piece of real property. They
each contributed $100,000 to the purchase. Which of the following
forms of property ownership would automatically pass the property to
Bob and Chuck if Al dies first? Answer: JTWROS
◉ Assume Ann, 45, leaves her job at Google and takes a similar position
at Facebook. If she instructs Google's human resource department to
, distribute her existing 401(k) balance to an IRA, Answer: Google may
distribute Ann's full account balance without withholding any amount.
◉ Assume that the United States is experiencing a larger than normal
GDP growth and the Federal Reserve wants to "cool things off" with an
interest rate hike. Which of the following BEST describes the
mechanism to accomplish this objective? Answer: Pursue open market
activities (OMA) to sell bonds.
◉ Assuming Amy created a five-year grantor annuity trust (GRAT) in
2015 with a 25% annuity payment, and she dies in 2018 Answer: Amy
could have used her closely held business or a publicly traded stock to
fund the GRAT
◉ Barney, an insurance agent, shows Myron why he needs $250,000 of
additional coverage. Myron is young and has three young children. He is
investment-minded and likes to play the market. Which of the following
is the best option for Myron Answer: $250,000 variable universal life
policy
◉ Compared to conventional mortgage loans, jumbo mortgage loans
typically Answer: have a higher interest rate
◉ Currently, a retired worker, who is 67 years of age, receives $22,500
of employment earnings. Social Security benefits will be reduced by:
Answer: 0%
COMPLETE QUESTIONS AND
VERIFIED ANSWERS
◉ Non-Qualified Deferred Compensation Answer: TCHRA:
Compensation that is not immediately taxable. It does not qualify under
ERISA for tax exemption. Taxation occurs once the individual receives
the compensation or "property"
◉ A 1035 exchange refers to a tax free exchange of... Answer: Annuities
◉ 1035 Exchange Answer: IRS allows tax-free transfer of cash values
between 2 LIKE policies (i.e. Life to Life, Annuity to Annuity, or Life to
Annuity).
◉ If a bank uses its own proprietary mutual funds for fiduciary accounts
then it should do the following (3) Answer: -Be able to substantiate the
reasonableness of using these funds
-Explain the fees associated
-Monitor the fund's investment performance
◉ A simple trust earned $27,000 in dividends. It paid $4,000 in trustee
fees. 1/2 from Income and 1/2 from P. What is the DNI? Answer:
$23,000
,◉ T/F: In a simple trust, trustee fees are deducted from DNI even the
fees that come out of Principal? Answer: True
◉ Sprinkling trust Answer: A trust in which the income or principal is
distributed among the members of a designated class in amounts and
proportions as may be determined in the discretion of the trustee or other
party. Also called spraying trust.
◉ A US dollar can buy 33 Thai Baht. What is a characteristic of the
Thai Baht? Answer: The Thai Baht is a medium f exchange to facilitate
trade and of itself has no intrinsic value.
◉ A very wealthy client created a trust that names your bank as a co-
trustee with an individual following the client's death. Upon reviewing
the trust document, you notice that the individual trustee is granted sole
and complete responsibility for all trust investment decisions. Is that
acceptable? What should you follow up with? Answer: This is ok but
you should require that trust contain broad language specifying that the
bank will be exonerated (exculpated) from any decision made individual
trustee.
◉ Al, Bob and Chuck purchased a $300,000 piece of real property. They
each contributed $100,000 to the purchase. Which of the following
forms of property ownership would automatically pass the property to
Bob and Chuck if Al dies first? Answer: JTWROS
◉ Assume Ann, 45, leaves her job at Google and takes a similar position
at Facebook. If she instructs Google's human resource department to
, distribute her existing 401(k) balance to an IRA, Answer: Google may
distribute Ann's full account balance without withholding any amount.
◉ Assume that the United States is experiencing a larger than normal
GDP growth and the Federal Reserve wants to "cool things off" with an
interest rate hike. Which of the following BEST describes the
mechanism to accomplish this objective? Answer: Pursue open market
activities (OMA) to sell bonds.
◉ Assuming Amy created a five-year grantor annuity trust (GRAT) in
2015 with a 25% annuity payment, and she dies in 2018 Answer: Amy
could have used her closely held business or a publicly traded stock to
fund the GRAT
◉ Barney, an insurance agent, shows Myron why he needs $250,000 of
additional coverage. Myron is young and has three young children. He is
investment-minded and likes to play the market. Which of the following
is the best option for Myron Answer: $250,000 variable universal life
policy
◉ Compared to conventional mortgage loans, jumbo mortgage loans
typically Answer: have a higher interest rate
◉ Currently, a retired worker, who is 67 years of age, receives $22,500
of employment earnings. Social Security benefits will be reduced by:
Answer: 0%
