CTFA Practice Exam 1 Questions And Corre
Q. cWhich cof cthe cfollowing ctypes cof ctrusts ccan cuse cthe cUniform cPrincipal cand cIncome cAct cpow
A. cGRAT c
B. cTrust cunder cwill c
C. cRevocable ctrust c
D. cCharitable clead ctrust c- cCORRECT cANS✔✔Solution c: cThe ccorrect canswer cis cB.
Q. cWhich cof cthe cfollowing cis ca cpower cof cattorney cfor cproperty cthat cis ceffective cupon cexecutio
cupon cthe cprincipal's cincapacity?
A. cGeneral
B. cSpringing
C. cDurable
D. cLimited c- cCORRECT cANS✔✔Solution: cThe ccorrect canswer cis cC
Q. cA cclient cborrows c$ c100,000 c, cand cuses cthe cproceeds cto cpurchase c$ c75,000 cin cequities can
cbonds c. cThe cinterest con cthe cloan cis c: c
A. cNot cdeductible cbecause cit cis ctainted cby cthe cpurchase cof ctax c- cexempt cbonds cB. cNot cdedu
cpersonal cinterest c
C. cDeductible cto cthe cextent cof cinvestment cincome cafter cproper callocation cbetween ctaxable cand
D. cDeductible cin cfull cas cinvestment cinterest c- cCORRECT cANS✔✔Solution c: cThe ccorrect cansw
Q. cWhat cis cthe cBEST creason cto cinclude cinternational csecurities cin ca cportfolio cof cexisting cstoc
A. cDecrease cdiversification c
B. cLikely cimprove cdiversification
C. cLikely cincrease cportfolio cvolatility c
D. cImprove ctax cefficiency c- cCORRECT cANS✔✔Solution c: cThe ccorrect canswer cis cB.
, D. cAcknowledge cthat cthe cuse cof cprudent cinvestments cis cmore ccritical cto cportfolio cperformance
cinflation cor cmarket crisk c- cCORRECT cANS✔✔Solution c: cThe ccorrect canswer cis cB.
Q. cA cclient creceived ca c$ c15,000 cbonus cand cwould clike cto cuse cthe cmoney cfor ca cdown cpayme
c. cWhich cof cthe cfollowing cis cthe cMOST cappropriate cinvestment capproach c? c
A. cBuy ca c5 c- cyear c, cAAA c- crated cmunicipal cbond c
B. cPurchase ca c52 c- cweek cU.S. cTreasury cbill c
C. cInvest cin can cS c& cP c500 cindexed cmutual cfund c
D. cInvest cin ca cblue c- cchip ccompany ccommon cstock ccovered ccall c- cCORRECT cANS✔✔Solutio
Q. cTwo csibling cclients cwill ceach cinherit ca cone c- chalf cremainder cinterest cin ctheir cfather's ctestam
cthey csurvive ctheir cmother c, cthe ccurrent cbeneficiary c. cIf cneither csibling csurvives ctheir cmother c,
cwill cpass cto cthe csiblings c' cchildren cper cstirpes c. cWith cthis carrangement c, cif cone cof cthe csibling
cinterest c, cwho cwould creceive cthat cdisclaimed cinterest c? c
A. cThe cother csibling c
B. cThe cmother c
C. cThe cdisclaiming csibling's cchildren c
D. cThe cfather's cresiduary cestate c- cCORRECT cANS✔✔Solution c: cThe ccorrect canswer cis cC.
Q. cA cclient crecently cpassed caway cand call cpersonal cproperty cis cto cbe csold cat ca cpublic cauction
cclient's crevocable ctrust casks ca cfriend cto cattend cthe cauction cand cbid con ca clamp c. cThe cfriend's
ctrust cadvisor cbuys cthe clamp cfrom cthe cfriend cfor cthe cauction cprice c. cWhich cof cthe cfollowing cb
coccurred c? c
A. cConflict cof cinterest c
B. cSelf c- cdealing c
C. cDuty cof cloyalty c
D. cImpartiality c- cCORRECT cANS✔✔Solution c: cThe ccorrect canswer cis cB.
Q. cA cclient c, cage c72 c, cis creceiving cannuity cpayments cof c$ c1,850 cper cmonth cfrom ca cfixed cann
clast c- csurvivor cbasis c. cThe cclient's cspouse cis c68 cyears cold c. cIf cthe cclient cdies cfirst c, cthen c: c
A. cAfter cthe cspouse cdies c, cthe cannuity cpayments cwill cstop c
B. cAfter cthe cspouse cdies c, cthe cannuity cpayments cwill ccontinue cto ctheir cdesignated cbeneficiarie
C. cBefore cthe cspouse cdies c, cthe cannuity cpayments cwill cstop c
D. cBefore cthe cspouse cdies c, cthe cannuity cpayments cwill ccontinue ctax c- cfree cto cthe cspouse c- cC
cThe ccorrect canswer cis cA.
Q. cA cclient cmay cavoid cor cminimize cAMT cliability cMOST ceffectively cby c: cA. cMaximizing ctrust co
B. cMinimizing cincome cfrom cpassive cactivities c
C. cUsing ca chome cequity cloan cto cpay cfor ca cvehicle c
D. cTaking cthe cstandard cdeduction c- cCORRECT cANS✔✔Solution c: cThe ccorrect canswer cis cB.
Q. cUnder cthe cUSA cPATRIOT cAct c, ca cfinancial cinstitution cis cNOT crequired cto cestablish c: c
A. cWritten cclient cidentification cprograms c
B. cFormal congoing cemployee ctraining cprograms c
C. cA ctracking csystem cto cdemonstrate ccompliance c
D. cDue cdiligence cprocedures cfor cforeign cinstitutions cand ccertain caccounts c- cCORRECT cANS✔
canswer cis cC.
Q. cAs cthe cresult cof ca cclaim csettlement cfor cdelinquent crent con ctrust cproperty c, cthe ctrustee crec
cThe ctrustee's cFIRST caction cshould cbe cto c: cA. cTransfer cthe csum cto ca creserve cfor cfiduciary cta
B. cDistribute cthe csum cto cthe cincome cbeneficiaries c
C. cDistribute cthe csum cto cthe cremainder cbeneficiaries c
D. cAllocate cthe csum cto cincome cof cthe ctrust cto censure cproper caccounting c- cCORRECT cANS✔
canswer cis cD.
Q. cWhich cof cthe cfollowing ctypes cof ctrusts ccan cuse cthe cUniform cPrincipal cand cIncome cAct cpow
A. cGRAT c
B. cTrust cunder cwill c
C. cRevocable ctrust c
D. cCharitable clead ctrust c- cCORRECT cANS✔✔Solution c: cThe ccorrect canswer cis cB.
Q. cWhich cof cthe cfollowing cis ca cpower cof cattorney cfor cproperty cthat cis ceffective cupon cexecutio
cupon cthe cprincipal's cincapacity?
A. cGeneral
B. cSpringing
C. cDurable
D. cLimited c- cCORRECT cANS✔✔Solution: cThe ccorrect canswer cis cC
Q. cA cclient cborrows c$ c100,000 c, cand cuses cthe cproceeds cto cpurchase c$ c75,000 cin cequities can
cbonds c. cThe cinterest con cthe cloan cis c: c
A. cNot cdeductible cbecause cit cis ctainted cby cthe cpurchase cof ctax c- cexempt cbonds cB. cNot cdedu
cpersonal cinterest c
C. cDeductible cto cthe cextent cof cinvestment cincome cafter cproper callocation cbetween ctaxable cand
D. cDeductible cin cfull cas cinvestment cinterest c- cCORRECT cANS✔✔Solution c: cThe ccorrect cansw
Q. cWhat cis cthe cBEST creason cto cinclude cinternational csecurities cin ca cportfolio cof cexisting cstoc
A. cDecrease cdiversification c
B. cLikely cimprove cdiversification
C. cLikely cincrease cportfolio cvolatility c
D. cImprove ctax cefficiency c- cCORRECT cANS✔✔Solution c: cThe ccorrect canswer cis cB.
, D. cAcknowledge cthat cthe cuse cof cprudent cinvestments cis cmore ccritical cto cportfolio cperformance
cinflation cor cmarket crisk c- cCORRECT cANS✔✔Solution c: cThe ccorrect canswer cis cB.
Q. cA cclient creceived ca c$ c15,000 cbonus cand cwould clike cto cuse cthe cmoney cfor ca cdown cpayme
c. cWhich cof cthe cfollowing cis cthe cMOST cappropriate cinvestment capproach c? c
A. cBuy ca c5 c- cyear c, cAAA c- crated cmunicipal cbond c
B. cPurchase ca c52 c- cweek cU.S. cTreasury cbill c
C. cInvest cin can cS c& cP c500 cindexed cmutual cfund c
D. cInvest cin ca cblue c- cchip ccompany ccommon cstock ccovered ccall c- cCORRECT cANS✔✔Solutio
Q. cTwo csibling cclients cwill ceach cinherit ca cone c- chalf cremainder cinterest cin ctheir cfather's ctestam
cthey csurvive ctheir cmother c, cthe ccurrent cbeneficiary c. cIf cneither csibling csurvives ctheir cmother c,
cwill cpass cto cthe csiblings c' cchildren cper cstirpes c. cWith cthis carrangement c, cif cone cof cthe csibling
cinterest c, cwho cwould creceive cthat cdisclaimed cinterest c? c
A. cThe cother csibling c
B. cThe cmother c
C. cThe cdisclaiming csibling's cchildren c
D. cThe cfather's cresiduary cestate c- cCORRECT cANS✔✔Solution c: cThe ccorrect canswer cis cC.
Q. cA cclient crecently cpassed caway cand call cpersonal cproperty cis cto cbe csold cat ca cpublic cauction
cclient's crevocable ctrust casks ca cfriend cto cattend cthe cauction cand cbid con ca clamp c. cThe cfriend's
ctrust cadvisor cbuys cthe clamp cfrom cthe cfriend cfor cthe cauction cprice c. cWhich cof cthe cfollowing cb
coccurred c? c
A. cConflict cof cinterest c
B. cSelf c- cdealing c
C. cDuty cof cloyalty c
D. cImpartiality c- cCORRECT cANS✔✔Solution c: cThe ccorrect canswer cis cB.
Q. cA cclient c, cage c72 c, cis creceiving cannuity cpayments cof c$ c1,850 cper cmonth cfrom ca cfixed cann
clast c- csurvivor cbasis c. cThe cclient's cspouse cis c68 cyears cold c. cIf cthe cclient cdies cfirst c, cthen c: c
A. cAfter cthe cspouse cdies c, cthe cannuity cpayments cwill cstop c
B. cAfter cthe cspouse cdies c, cthe cannuity cpayments cwill ccontinue cto ctheir cdesignated cbeneficiarie
C. cBefore cthe cspouse cdies c, cthe cannuity cpayments cwill cstop c
D. cBefore cthe cspouse cdies c, cthe cannuity cpayments cwill ccontinue ctax c- cfree cto cthe cspouse c- cC
cThe ccorrect canswer cis cA.
Q. cA cclient cmay cavoid cor cminimize cAMT cliability cMOST ceffectively cby c: cA. cMaximizing ctrust co
B. cMinimizing cincome cfrom cpassive cactivities c
C. cUsing ca chome cequity cloan cto cpay cfor ca cvehicle c
D. cTaking cthe cstandard cdeduction c- cCORRECT cANS✔✔Solution c: cThe ccorrect canswer cis cB.
Q. cUnder cthe cUSA cPATRIOT cAct c, ca cfinancial cinstitution cis cNOT crequired cto cestablish c: c
A. cWritten cclient cidentification cprograms c
B. cFormal congoing cemployee ctraining cprograms c
C. cA ctracking csystem cto cdemonstrate ccompliance c
D. cDue cdiligence cprocedures cfor cforeign cinstitutions cand ccertain caccounts c- cCORRECT cANS✔
canswer cis cC.
Q. cAs cthe cresult cof ca cclaim csettlement cfor cdelinquent crent con ctrust cproperty c, cthe ctrustee crec
cThe ctrustee's cFIRST caction cshould cbe cto c: cA. cTransfer cthe csum cto ca creserve cfor cfiduciary cta
B. cDistribute cthe csum cto cthe cincome cbeneficiaries c
C. cDistribute cthe csum cto cthe cremainder cbeneficiaries c
D. cAllocate cthe csum cto cincome cof cthe ctrust cto censure cproper caccounting c- cCORRECT cANS✔
canswer cis cD.
