CTFA Online Practice Questions and Answers

Under an employer's group life assurance policy, what is the normal tax treatment of the death benefit?

A. It is liable to Inheritance Tax

B. It is liable to Capital Gains Tax

C. It is liable to Income Tax

D. It is not liable to any form of taxation

Calculating certain financial ratios can help you evaluate your financial performance over time. What's more, if you apply for a loan, the lender probably will look at the ratios to judge your ability to carry additional debt. Four important money management ratios are all of the following Except:

A. Solvency ratio

B. Liquidity ratio

C. Savings account ratio

D. Debt service ratio

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

In credit card payments, late payment charges occur when you only pay the minimum payment.

A. True

B. False

C. It depends

D. There are no such charges

The highest and best use of the asset is ___________, if the asset would provide maximum value to market participants principally on the standalone basis.

A. In-exchange

B. In-use

C. In-market

D. In-sale

The deduction must be based on identification of specific doubtful amounts and is limited to the maximum of doubtful debts identified in the year or a preceding year and 75 percent of the amount reported for statutory purposes.

A. True

B. False

Which of the following is pattern that occurs during high volatility, when a security shows great movement with the direction?

A. Broadening formation

B. Relative strength index

C. On balance volume

D. Bollinger bands

Which of the following is payment to owners in stock?

A. Penny stock

B. Stock dividend

C. Stock flicker

D. Stock ticker

Insurance policies may be classified in which of the following categories?

A. By policy planning

B. By type of risks coverage

C. By kind of insurance underwritten

D. All of the above

Procedures for ensuring that the data used by the loss reserve specialist is completed and accurate due to:

A. Controls over the preparation of managerial data

B. Controls over the preparation of accounting estimates

C. Controls over the preparation of supporting data

D. Controls over the preparation of assumed alternatives

An entity's practices concerning loss settlement, such as a practice of vigorously defending suits or of quickly settling suits, can have a significant effect on an entity's loss experience.

A. True

B. False

An attitude that includes a questioning mind and a critical assessment of audit evidence is called: A. Operational skepticism

B. Audit skepticism

C. Professional skepticism

D. None of the above

If you commit $200 to an investment at the beginning of the year, what is your rate of return for the period?

A. 1.10

B. 1.50

C. 1.00

D. 1.70

Which of the following statements about the over-the-counter market is false?

A. Mutual funds and other new issues are initially issued over the counter

B. Security prices are determined through auction bidding

C. Broker dealers must be resigned

D. Securities are traded at many locations throughout the country

Single payment loan is a loan:

A. Made for a specified period

B. At the end of which payment is due in full

C. At the end of which half of the payment is due

D. That expires within a year