CTFA Online Practice Questions and Answers

It is a measure of inflation based on changes in consumer goods and services:

A. Consumer price Index

B. Customer price Index

C. Market rate Index

D. Market value

What are the earnings per share (EPS) for a company that earned $100,000 last year in after-tax profits, has 200,000 common shares outstanding and $1.2 million in retained earning at the year end?

A. $100,000

B. $6.00

C. $0.50

D. $6.50

You are considering two mutually exclusive investment proposals, project A and project B B's expected value of net present value is $1,000 less than that for A and A has less dispersion. On the basis of risk and return, you would say that

A. Project A dominates project B

B. Project B dominates project A

C. Project A is more risky and should offer greater expected value

D. Each project is high on one variable, so the two are basically equal

An adoption tax credit of up to $11650 is available for the qualifying costs of adopting child under age 18. Only taxpayers with AGI under $17,730 are eligible for the adoption tax credit. Here are some other common tax credits. Which of the following is/are Not out of those?

A. Credit for the elderly or the disabled

B. National tax credit

C. Credit for prior year minimum tax

D. Credit for qualified electric vehicle

Stocks of established companies are called:

A. Growth stocks

B. Blue chip stocks

C. Cyclic stocks

D. Income Stocks

Which of the following make use of divisor to adjust for stock splits?

A. Capitalization weighting

B. Price weighting

C. Equal weighting

D. Base weighting

Which of the following usually represents an unusually risky stocks?

A. Blue chip stock

B. Growth stock

C. Penny stock

D. None of these

When no tax deductions are allowed if risks are not transferred, whereas premiums paid to insurers are tax deductible, this leads to the formation of:

A. Portfolio

B. Claims

C. Captives

D. Fronting

Which of the following is not an audit objective of a commodity department?

A. All customer accounts are opened and maintained in accordance with the rules and regulations commodity futures trading commission (CFTC) and the various commodity Exchanges

B. Adequate control exist to ensure the accuracy and propriety of information contained in regulatory reports, such as the commodity futures trading commission form 1-FR, and the focus report

C. Verify the accuracy and reporting (inventory reports, fail reports, again reports and profit and loss reports.)

D. None of these

For $1,000 you can purchase a 5-year ordinary annuity that will pay you a yearly payment of $263.80 for 5 years. The compound annual interest rate implied by this arrangement is closest to:

A. 8%

B. 9%

C. 10%

D. 11%