Certified Trust and Financial Advisor Sample Questions
Portable evidence of competence is provided via certifications. Programs that lead to certification can improve self-esteem, credibility, and promote both personal and professional growth. The American Bankers Association (ABA) grants the professional certification of Certified Trust and Financial Advisor (CTFA), which confers training and competence in taxes, investments, financial planning, trusts, and estates. Your professional credentials might set you apart from other experts in your sector. They assist you in proving your dedication to mastering your field and being the best at it. This may give you a competitive advantage, which is crucial in today’s industry.
- DOMAIN 1: FIDUCIARY PRINCIPLES AND APPLICATIONS (9%)
- DOMAIN 2: INTEGRATED PLANNING AND ADVICE (FINANCIAL AND TAX) (28%)
- DOMAIN 3: ASSET MANAGEMENT – INTERACTION OF ALL ASSET TYPES (19%)
- DOMAIN 4: ADMINISTRATION OF TRUST ACCOUNTS (16%)
- DOMAIN 5: RISK/COMPLIANCE MANAGEMENT (15%)
- DOMAIN 6: ETHICS (6%)
- DOMAIN 7: RELATIONSHIP MANAGEMENT (7%)
Q1)Among the many financial aspirations covered by financial goals are the following:
- A. Controlling living expenses
- B. Meeting retirement needs
- C. Setting up a savings and investment program
- D. All of the above
Correct Answer: D
Q2)These are anticipated completion dates for specific financial goals in the future. These are what in Certified Trust and Financial Advisor?
- A. Goal dates
- B. Target dates
- C. Due dates
- D. Financial dates
Correct Answer: A
Q3)The comprehensive employee benefits package available today may include all benefits, WITH THE EXCEPTION OF:
- A. Long -term care insurance
- B. Dental and vision care
- C. Subsidized employee benefit plan
- D. Partial retirement plans
Correct Answer: D
Q4)Building up resources to benefit from in retirement is merely a portion of the:
- A. Long-term financial planning process
- B. Short-term financial planning process
- C. Life time financial planning process
- D. Permanent financial planning process
Correct Answer: A
Q5)In this kind of employee benefit programme, the employer sets aside a particular sum of money, and the employee then uses that money to purchase benefits from a menu that includes everything from retirement benefits to health and life insurance to child care.
- A. Flexible benefit plan
- B. Cafeteria plan
- C. Short-term financial plan
- D. Both of the above are one and the same
Correct Answer: D
Q6)The UK government must always consider how the EU and UK interact when it comes to the regulation of the financial services sector.
- A. Before enforcing any new restrictions, get permission from the European Commission.
- B. put new EU Directives into effect by approving legislation.
- C. Incorporate into UK law all EU decisions.
- D. in a fair amount of time, send copies of the revised regulation to the European Commission for their approval.
Correct Answer: B
Q7)A client previously wrote to her former advisor to request that she not receive any marketing communications from the company or any other parties. She does, however, continue to get proposals from the company for direct investments. Which set of regulations does the company need to follow before she may file a complaint?
- A. Conduct of Business rules.
- B. Data Protection Act 1998.
- C. Distance Selling Regulations.
- D. Treating Customers Fairly.
Correct Answer: B
Q8)Which type(s) of financial advice are regulated under the Financial Services and Markets Act 2000?
- A. Only giving vulnerable people advice
- B. Giving everyone advice
- C. Advice is only for group personal pension plans and all persons.
- D. Advice to all people, unless they are voluntarily choosing to become professional clients
Correct Answer: B
Q9)In addition to having expertise working with retail clients, Simon is currently pursuing certification as a pension transfer specialist. Which of the subsequent statements is accurate as a result in Certified Trust and Financial Advisor?
- A. Before starting his training, he must have at least three years of experience as an adviser.
- B. His employer is also permitted to set a deadline for finishing the qualification.
- C. His supervisor must likewise be appropriately trained.
- D. After obtaining certification, CPD requirements are eliminated for a year.
- E. Following qualification, his training records must be kept for a minimum of five years.
Correct Answer: B and C
Q10)The ideal balance between: is represented by the efficient frontier curve.
- A. Risk and return
- B. Return and taxation
- C. Taxation and risk
- D. Inflation and return
Correct Answer: A
Q11)An investor from the UK is worried about the exchange rate risk because they own a portfolio of foreign stocks. What method could he employ to lessen this risk in Certified Trust and Financial Advisor?
- A. Arbitrage
- B. Gearing
- C. Hedging
- D. Pound cost averaging
Correct Answer: C
Q12)The most tax-effective approach to building a portfolio for a basic-rate taxpayer who resides in the UK and needs income would be to:
- A. Limiting investments to foreign goods
- B. Investing in fixed-interest securities through a stocks and shares ISA
- C. Buying Fixed-Interest Savings Certificates from National Savings & Investments (NS&I)
- D. Investing in high-yielding stocks through an Individual Savings Account
Correct Answer: B
Q13)The following are the main justifications for utilising the Sharpe ratio for determining a portfolio’s performance:
- A. For each unit of risk taken, it shows the percentage return above or below the risk-free rate.
- B. It will always be priced quarterly on a rolling basis.
- C. Positive Sharpe ratios will always result in profitable investments.
- D. The greater the number, the greater the value that a portfolio manager is said to have added.
Correct Answer: A and D
Q14)Pauline, a basic-rate taxpayer, has OEICs and a variety of equities and fixed-interest unit trusts in her portfolio. She needs to be mindful of:
- A. For the purposes of calculating capital gains taxes, any losses from this portfolio are acceptable.
- B. A 10% tax credit will apply to her whole portfolio.
- C. Capital Gains Tax would only apply to the sale revenues from OEICs.
- D. The taxation of dividends from holding OEICs will be handled similarly to that of unit trusts.
- E. She will never be able to recoup any source-tax deductions.
Correct Answer: A and D
Q15)Philip purchased a 20-year qualifying onshore endowment insurance, which he paid off in year 9. This implies that he might be held personally liable for taxes on the proceeds of the insurance:
- A. At maturity
- B. If he makes a partial surrender
- C. If he assigns the policy to his wife
- D. On settlement of a critical illness claim
Correct Answer: A and B
Q16)Bill, a single man, made a theoretically exempt transfer of £100,000 four and a half years prior to his passing after using up all of his annual gift allowances. He has not given any additional presents. His remaining estate is currently worth £500,000. The amount of inheritance tax due upon death is:
- A. £30,000
- B. £46,000
- C. £94,000
- D. £110,000
Correct Answer: D
Q17)Brian’s estate was worth £820,000 when he passed away. He left a registered charity £40,000 and divided the remaining money equally between his brother and registered civil partner. What will the inheritance tax obligation be, assuming he didn’t make any lifetime transfers?
- A. £22,750
- B. £26,000
- C. £29,750
- D. £34,000
Correct Answer: B
Q18)In a defined benefit business pension plan, Trevor participates. Which circumstance-related element demonstrates that he won’t be subject to a special yearly allowance charge during the current tax year?
- A. Firstly, he is a member of an Employer Financed Retirement Benefit Scheme (EFRBS)
- B. Next, he is aged 61
- C. Further, his total annual earnings have never exceeded £110,000
- D. His benefits include the maximum level of death benefit
Correct Answer: C
Q19)When levels of employment and production decline and economic growth slows, this stage of the economic cycle is known as:
- A. Growth
- B. Expansion
- C. Recession
- D. Recovery
Correct Answer: C
Q20)When levels of employment and production are low and economic growth is essentially at a halt or even negative, this stage of the economic cycle is known as:
- A. Growth
- B. Expansion
- C. Recession
- D. Depression
Correct Answer: D
