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CTFA PRACTICE EXAM 3 QUESTIONS WITH COMPLETE ANSWERS.
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CTFA PRACTICE EXAM 3 QUESTIONS WITH COMPLETE ANSWERS.
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CTFA PRACTICE EXAM 3 QUESTIONSWITH COMPLETE ANSWERS
Q. rWhen rcan ra rbank rtrustee rsell ror rpurchase rassets rfrom ra rtrust rwhere rit rserves rin
ra rfiduciary rcapacity?
A. rWhen rthe rtrustee rdesires rto rrelieve ritself rfrom rsuch rliability rwith rthe rapproval rof
rthe rboard
B. rWhen rthe rtrust rsells rproperty rto rany rnon-officer rof rthe rbank, rif rthe rtrust rcommittee
rdeems rthe rprice rreasonable
C. rWhen rthe rtrust rpurchases rstock ror robligations rof rthe rbank, rif rthe rbank ror rits
rholding rcompany ris rlisted ron ra rrecognized rstock rexchange
D. rWhen rthe rtrust rsells rassets rin rone raccount rto ritself ras rfiduciary rin ranother
raccount, rif rthe rtransaction ris rfair rto rboth raccounts rand rnot rprohibited rby rany
rgoverning rinstrument ror rlocal rlaw r- r✔✔D. rWhen rthe rtrust rsells rassets rin rone
raccount rto ritself ras rfiduciary rin ranother raccount, rif rthe rtransaction ris rfair rto rboth
raccounts rand rnot rprohibited rby rany rgoverning rinstrument ror rlocal rlaw
Q. rPertaining rto rthe rownership rof rproperty, rwhich rstatement ris rcorrect?
A. rJoint rtenancy rownership rof ran rasset rcannot roccur rbetween rnon-spouses.
B. rWhen rproperty ris rowned ras rtenancy rin rcommon rform rby rfour rowners, reach
rparty's rinterest rmust rbe r25 rpercent.
C. rTenancy rin rcommon rownership rcan roccur rbetween rspouses.
D. rJoint rtenancy rproperty rmust rpass rthrough rprobate rupon rthe rdeath rof rthe rfirst
rtenant. r- r✔✔C. rTenancy rin rcommon rownership rcan roccur rbetween rspouses.
Q. rA rvariable rannuity rresembles rwhich rof rthe rfollowing?
A. rFixed rincome rmutual rfund
B. rFixed rincome rIRA
C. rEquity rmutual rfund
D. rQualified rpension rplan r- r✔✔C. rEquity rmutual rfund
Q. rA rclient rhas ra rnongrantor rtrust rthat rdoes rnot rdistribute rall rof rits rordinary rincome
rearned rand rrealized rcapital rgains. rThe rtrust ris rin ra rstate rthat rhas ra rsignificant rstate
rincome rtax. rWhich rof rthe rfollowing rwill rminimize ror reliminate rtrust rincome rtax?
A. rDecant rthe rtrust.
B. rUse ra rnonjudicial rsettlement ragreement.
C. rChange rsitus rto ra rstate rthat rhas rno rtrust rincome rtax.
D. rIncorporate ra rdynasty rtrust rprovision raddressing rtrust rtaxation. r- r✔✔C. rChange
rsitus rto ra rstate rthat rhas rno rtrust rincome rtax.
Q. rWhich rof rthe rfollowing rstatements rdescribes rboth ra rtraditional rIRA rand ra rRoth
rIRA?
, A. rContributions rare rallowed rat rany rage.
B. rAnnual rcontribution rlimits rare rthe rsame.
C. rWithdrawals rare rtaxed ras rordinary rincome.
D. rThe rimpact ron restate rplanning ris requivalent. r- r✔✔B. rAnnual rcontribution rlimits
rare rthe rsame.
Q. rA rclient rmakes ra rcash rgift rto ra rfriend rin rJanuary rof rthis ryear rin rthe ramount rof
r$16,000. rWhen ris rthe rclient rrequired rto rfile ra rfederal rgift rtax rreturn?
A. rNever
B. rOn ror rbefore rApril r15 rthis ryear
C. rOn ror rbefore rApril r15 rnext ryear
D. rOn ror rbefore rApril r15 rof rthe ryear rfollowing rthe racceptance rof rthe rgift r- r✔✔A.
rNever
Q. rThe rFederal rReserve rOpen rMarkets rCommittee rhas rbegun rraising rshort-term
rinterest rrates. rWhich rof rthe rfollowing rrisk rtypes rcreates rthe rmost rrisk rto ra rportfolio?
A. rIssue
B. rCredit
C. rInterest rrate
D. rLegislative/political r- r✔✔C. rInterest rrate
Q. rWhich rof rthe rfollowing ris rincluded rin rgross rincome?
A. rRoth rIRA rdistributions
B. rChild rsupport rpayments
C. rLife rinsurance rproceeds
D. rAward rof rpunitive rdamages r- r✔✔D. rAward rof rpunitive rdamages
Q. rThe rresiduary rbeneficiaries rof ran r$8,000,000 restate rare rthe rdecedent's rtwo
rchildren, rper rstirpes. rThe rbank rand rchild r1 rare rco-executors rof rthe restate. rChild r1
rhas ramassed ra rlarge restate rand ris rconcerned rabout rtax rimplications rof rthe
rinheritance rand rasks rwhat roptions rare ravailable rto rminimize rchild r1's rfuture restate
rtax. rYou rinform rchild r1 rthat rthe rdecedent rdid rnot ruse rthe ravailable rGST rtax
rexemption rduring rlife rand rthat rthe rgoverning rdocument rprovides rthe roption rto
rdisclaim rthe rinheritance. rWhich rof rthe rfollowing rdescribes rthe rappropriate rnext
raction rthe rbank rshould rtake?
A. rAdvise rchild r1 rto rseek rlegal rcounsel ron rthese rmatters.
B. rAdvise rchild r1 rto rcontact rchild r2 rto rinform rchild r2 rof rthese roptions.
C. rProvide rchild r1 rwith ra rwritten rexplanation rof rthe rrecommendations.
D. rProvide rchild r1 rand rchild r2 rwith ra rwritten rrecommendation rand radvise rthem rto
rconsult rindependent rcounsel. r- r✔✔A. rAdvise rchild r1 rto rseek rlegal rcounsel ron rthese
rmatters.
Q. rA rclient rand rattorney rare rcreating ra rtrust rthat rwill rallow rfor rdiscretionary
rpayments ramong rthe rclient's rchildren, rgrandchildren, rand rspouse rbased ron reach rof
rtheir rindividual rfinancial rneeds rwith rno robligation rto requalize rpayments. rTo reffect
rthis, rthe rattorney rshould rinclude rwhich rof rthe rfollowing rin rthe rtrust rdocuments?
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