CANNON CTFA 2026 EXAM SCRIPT QUESTIONS AND
SOLUTIONS GRADED A+
✔✔GNMA pass-through certificates - ✔✔Bonds pay interest semi-annually
except____________
✔✔Fixed Annuities - ✔✔_________________ provide a guaranteed income for life
✔✔500 - ✔✔If you own 250 share of a stock and then it has a 2:1 split how many share
do you now own?
✔✔automobiles, machine tools, steel producer - ✔✔Cyclical Stocks include...?
✔✔Cyclical Stocks - ✔✔A stock that's price is affected by macroeconomic changes,
where its returns follow the cycles of an economy. Usually have higher volatility and are
expected to produce higher returns during periods of economic strength.
✔✔Foreign Securities - ✔✔What presents HIGH liquidity risk, HIGH sovereign risk, and
HIGH diversification
✔✔Bid Price - ✔✔The lowest price on a stock acceptable to a prospective seller.
✔✔The income tax brackets of the remainderman - ✔✔When choosing FIXED INCOME
investments for a portfolio what is the least important factor?
✔✔Increase your holdings in municipal bonds - ✔✔What is the best way to plan for an
increase in tax rates?
✔✔Earnings - ✔✔What are stock prices most impacted by?
✔✔11% - ✔✔What have stocks averaged since 1926?
✔✔State Taxes - ✔✔Bonds issued by most government agencies are exempt from what
kind of taxes?
✔✔The Issuer - ✔✔Call provisions benefit who?
✔✔Modern Portfolio Theory - ✔✔a method that can be used by risk-averse investors to
construct diversified portfolios that maximize their returns without unacceptable levels of
risk. Investors will only take on high-risk investments if they can expect a larger reward.
The portfolio itself is balanced in a way that its overall risk is lower than some of its
underlying investments.
, ✔✔Systematic Risk - ✔✔refers to market risks that cannot be reduced through
diversification, or the possibility that the entire market and economy will show losses
that negatively affect investments such as interest rates, wars, and recessions.
✔✔Unsystematic Risk or Specific Risk - ✔✔Specific to individual stocks, meaning it can
be diversified as you increase the number of stocks or other asset classes into a
portfolio
✔✔Joint Tenancy (WROS) - ✔✔Ownership by multiple individuals who have an
undivided interest. Everyone has equal interest, multiple owners. Avoids Probate
✔✔Sole Ownership - ✔✔Titled in the name of one person. Full rights of property in life
and death. Transfers under decedent's will or intestate estate. Subject to Probate.
✔✔Tenancy by the Entirety - ✔✔Form of Joint Tenancy held ONLY between spouses.
Ownership is held in the entirety so that the interest may not be partitioned without the
consent of both parties. Lending some creditor protection. NOT recognized in ALL
states. Avoids Probate.
✔✔Tennant's is Common - ✔✔Owned by multiple individuals who each have a
separate, but undivided interest. Each co-tenant may sell, gift, or transfer their interest
during life or at death. NO survivorship rights. Share interest may be unequal.
SUBJECT TO PROBATE unless decedent's share is held in a non-probate form of
ownership.
✔✔Community Property - ✔✔All property that spouses acquire by their joint efforts
during their marriage. Property owned at the time of marriage or acquired by gift or
inheritance and the rents and profits there from is considered "Separate Property"
Subject to Probate.
✔✔1.) Sole Property
2.) Tenants in common
3.) Community Property - ✔✔What forms of Ownership are subject to probate?
✔✔1.) Tenancy by the Entirety
2.) Joint Tenancy (WROS)
3.) Living Trust Property
4.) Beneficiary - ✔✔What forms of ownership AVOIDS Probate?
✔✔1.) Tenancy by the entirety
2.) Community Property - ✔✔What form of ownership can only be held between
spouses?
SOLUTIONS GRADED A+
✔✔GNMA pass-through certificates - ✔✔Bonds pay interest semi-annually
except____________
✔✔Fixed Annuities - ✔✔_________________ provide a guaranteed income for life
✔✔500 - ✔✔If you own 250 share of a stock and then it has a 2:1 split how many share
do you now own?
✔✔automobiles, machine tools, steel producer - ✔✔Cyclical Stocks include...?
✔✔Cyclical Stocks - ✔✔A stock that's price is affected by macroeconomic changes,
where its returns follow the cycles of an economy. Usually have higher volatility and are
expected to produce higher returns during periods of economic strength.
✔✔Foreign Securities - ✔✔What presents HIGH liquidity risk, HIGH sovereign risk, and
HIGH diversification
✔✔Bid Price - ✔✔The lowest price on a stock acceptable to a prospective seller.
✔✔The income tax brackets of the remainderman - ✔✔When choosing FIXED INCOME
investments for a portfolio what is the least important factor?
✔✔Increase your holdings in municipal bonds - ✔✔What is the best way to plan for an
increase in tax rates?
✔✔Earnings - ✔✔What are stock prices most impacted by?
✔✔11% - ✔✔What have stocks averaged since 1926?
✔✔State Taxes - ✔✔Bonds issued by most government agencies are exempt from what
kind of taxes?
✔✔The Issuer - ✔✔Call provisions benefit who?
✔✔Modern Portfolio Theory - ✔✔a method that can be used by risk-averse investors to
construct diversified portfolios that maximize their returns without unacceptable levels of
risk. Investors will only take on high-risk investments if they can expect a larger reward.
The portfolio itself is balanced in a way that its overall risk is lower than some of its
underlying investments.
, ✔✔Systematic Risk - ✔✔refers to market risks that cannot be reduced through
diversification, or the possibility that the entire market and economy will show losses
that negatively affect investments such as interest rates, wars, and recessions.
✔✔Unsystematic Risk or Specific Risk - ✔✔Specific to individual stocks, meaning it can
be diversified as you increase the number of stocks or other asset classes into a
portfolio
✔✔Joint Tenancy (WROS) - ✔✔Ownership by multiple individuals who have an
undivided interest. Everyone has equal interest, multiple owners. Avoids Probate
✔✔Sole Ownership - ✔✔Titled in the name of one person. Full rights of property in life
and death. Transfers under decedent's will or intestate estate. Subject to Probate.
✔✔Tenancy by the Entirety - ✔✔Form of Joint Tenancy held ONLY between spouses.
Ownership is held in the entirety so that the interest may not be partitioned without the
consent of both parties. Lending some creditor protection. NOT recognized in ALL
states. Avoids Probate.
✔✔Tennant's is Common - ✔✔Owned by multiple individuals who each have a
separate, but undivided interest. Each co-tenant may sell, gift, or transfer their interest
during life or at death. NO survivorship rights. Share interest may be unequal.
SUBJECT TO PROBATE unless decedent's share is held in a non-probate form of
ownership.
✔✔Community Property - ✔✔All property that spouses acquire by their joint efforts
during their marriage. Property owned at the time of marriage or acquired by gift or
inheritance and the rents and profits there from is considered "Separate Property"
Subject to Probate.
✔✔1.) Sole Property
2.) Tenants in common
3.) Community Property - ✔✔What forms of Ownership are subject to probate?
✔✔1.) Tenancy by the Entirety
2.) Joint Tenancy (WROS)
3.) Living Trust Property
4.) Beneficiary - ✔✔What forms of ownership AVOIDS Probate?
✔✔1.) Tenancy by the entirety
2.) Community Property - ✔✔What form of ownership can only be held between
spouses?
