CTFA Exam Questions

About half of the credit cards are rebate cards, and new cards are introduced every day. In one credit card incentive program, a number of credit cards allow cardholder to earn ann...

Debit card is a card use to make transactions for cash rather than credit; replaces the need for cash or checks by initiating charges against the checking account. Its big disadvan...

A line of credit issued against the existing equity in a home is called:

It is a line of credit made available to an individual on an as-needed basis.

Overdraft protection line is:

It is a type of open account offered by banks and other financial institutions that can be accessed by writing checks against demand deposit or specially designated credit line acc...

It is referred to an investigation that involves contacting credit references or corresponding with a credit beureau to verify information on a credit application.

Using data provided by the credit applicant, along with any information obtained from the credit bureau, the store or bank must decide whether to grant credit. Very likely, some ty...

A company can ensure the complete success of a rights offering by making use of a:

The market price of K-T-Lew Corporation's common stock is $60 per share, and each share gives its owner one subscription right. Four rights are required to purchase an additional s...

Financial intermediaries :

You are considering borrowing $10,000 for 3 years at an annual interest rate of 6%. The loan agreement calls for 3 equal payments, to be paid at the end of each of the next 3 years...

You can use to roughly estimate how many years a given sum of money must earn at a given compound annual interest rate in order to double that initial amount.

Loan disclosure statement is:

In a typical loan amortization schedule, the dollar amount of interest paid each period.

When n = 1, this interest factor equals one for any positive rate of interest.

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 cl...

To increase a given present value, the discount rate should be adjusted:

You are considering investing in a zero-coupon bond that sells for $250. At maturity in 16 years it will be redeemed for $1,000. What approximate annual rate of growth does this re...

In 3 years you are to receive $5,000. If the interest rate were to suddenly increase, the present value of that future amount to you would:

The amount of interest one pays to open credit depends_______ on the method the lender uses to calculate the balances on which they apply finance charges.

They say it pays to shop around and when it comes to credit cards that are certainly true. Regardless of which category they fall into, there are basically four credit card feature...

It is a form of legal recourse open to insolvent debtors, who may petition a court for protection from creditors and arrange for the orderly liquidation and distribution of their a...

It is a legal proceeding that results in "wiping the slate clean and starting anew"; most of the debtor's obligations are eliminated in an attempt to put the debtor's financial aff...

It is a professional financial advisor who assists overextended consumers in repairing budgets for both spending and debt repayment.

Loans made for specific purposes using formally negotiated contracts that specify the borrowing terms and repayments are called:

Collateral is a/an:

Student loans are amortized with monthly payments over a period of 5 to 10 years. To help you service the debt, if you have several student loans outstanding then you can consolida...

Single payment loan is a loan:

A loan that is repaid in a series of fixed, scheduled payments rather than a lump-sum is referred to as:

In _________ the use of single-payment loan to finance a purchase or pay bills in situations where the funds to be used for repayment are known to be forthcoming in the near future...

A firm that makes secured and unsecured personal loans to qualified individuals, also called a small loan company is called:

With continuous compounding at 10 percent for 30 years, the future value of an initial investment of $2,000 is closest to:

You want to buy an ordinary annuity that will pay you $4,000 a year for the next 20 years. You expect annual interest rates will be 8 percent over that time period. The maximum pri...

A profitability index of .85 for a project means that:

BackInSoon, Inc., has estimated that a proposed project's 10-year annual net cash benefit, received each year end, will be $2,500 with an additional terminal benefit of $5,000 at t...

Which of the following statements is correct?

Assume that a firm has accurately calculated the net cash flows relating to an investment proposal. If the net present value of this proposal is greater than zero and the firm is n...

A project's profitability index is equal to the ratio of the of a project's future cash flows to the project's .

The discount rate at which two projects have identical is referred to as Fisher's rate of intersection.

Two mutually exclusive investment proposals have "scale differences" (i.e., the cost of the projects differ). Ranking these projects on the basis of IRR, NPV, and PI methods give c...

If capital is to be rationed for only the current period, a firm should probably first consider selecting projects by descending order of .

The method provides correct rankings of mutually exclusive projects, when one is Not subject to capital rationing.

In an NPV sensitivity graph, a steep sensitivity line for a particular input variable means that a in that variable results in a in NPV.

One potential problem with sensitivity analysis is that it generally looks at sensitivity "one variable at a time." However, one way to judge the sensitivity of results to simultan...

A bond issue may be retired by:

Protective covenants are:

Which of the following bonds offer the investor the most protection?

A company refunds its bonds for any of the following reasons Except for:

The call-option value of a callable bond is likely to be high when: