CTFA Online Practice Questions and Answers

Which of the following compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset?

A. Moving average convergence/Divergence

B. Relative strength index

C. On balance volume

D. Bollinger bands

Which of the following tests is used to test the weak form of market efficiency?

A. Stock splits

B. Insider transactions

C. Accounting changes

D. None of these

In which of the following approaches the capitalization of an income is done?

A. Present value approach

B. Multiple of earning approach

C. Communicative approach

D. Integrated eclectic approach

The subsequent measurement of the deposits is based upon whether the insurance and reinsurance contract:

A. transfer only significant timing risk

B. transfer only significant underwriting risk

C. transfer neither significant timing nor underwriting risk

D. All of the above

Deposit float is the __________.

A. Total time between the mailing of the check by the customer and the availability of cash to the receiving firm

B. Time consumed in clearing the check through the banking system

C. Time the check is in the mail

D. Time during which the check received by the firm remains uncollected

The combined ratio is the sum of it:

A. loss ratio

B. Expense ratio

C. Dividend ratio

D. All of the above

Assume our typical 65-year-old investor likewise has adequate insurance coverage and a cash reserve. Let's also assume she is retiring this year. This individual will want less risk exposure than the 25-year-old investor, because her earning power from employment will soon be ending; she will not be able to recover any investment losses by saving more out of her paycheck. Depending on her income from social security and a pension plan, she may need some current income from her retirement portfolio to meet living expenses. Given that she can be expected to live an average of another 20 years, she will need protection against inflation. A risk-averse investor will choose a combination of current income and capital preservation strategy; a more risk-tolerant investor will choose:

A. A combination of current income and capital depreciation in an attempt to have principal growth outpace inflation

B. A combination of current income and capital preservation strategy

C. A combination of current income and capital appreciation in an attempt to have principal growth outpace inflation

D. A combination of current income and total return in an attempt to have principal growth outpace inflation

One fund may invest on mostly established "blue chip" (Companies that pay regular dividends). Another fund may invest in newer technology companies that pay no dividends but that may have more potential for growth. These are the examples of:

A. Mutual funds

B. Index funds

C. Stock funds

D. Bond funds

In mortgage loans closing costs are made up of all of the following Except:

A. Loan application and origination fees paid to the lender

B. Loan application and origination fees paid to the borrower

C. Mortgage points

D. Title search

Many savings programs are protected by the federal government against loss. Which of the following is Not?

A. A bond issued by one of the 50 states

B. A U.S. Treasury bond

C. A U.S. savings bond

D. A certificate of deposit at the bank