CERTIFIED TRADE FINANCE PROFESSIONAL
CTFP EXAM 2026 COMPREHENSIVE PRACTICE
TEST COLLECTION
◉ DRY LEASE. Answer: A net lease, traditionally for aircraft or
marine vessels, which specifically requires the lessee to procure all
personnel, fuel and provisions necessary to operate the craft.
◉ EARLY TERMINATION. Answer: The termination of a lease before
the end of its original term.
◉ EFFECTIVE LEASE RATE. Answer: Calculation of the rate utilizing
all cash flows in and out. When used to compare lease and loan
rates, the federal tax rate must be considered.
◉ END-OF-TERM OPTIONS. Answer: Options stated in the lease
agreement that give the lessee flexibility in its treatment of the
leased equipment at the end of the lease term. Common options
include purchasing the equipment, renewing the lease or returning
the equipment to the lessor. Options are sometimes given as an
amendment to the lease documents and are not made part of the
actual lease document. They may be a fixed dollar amount, a
percentage of equipment cost or fair market value.
,◉ EQUAL CREDIT OPPORTUNITY ACT (ECOA). Answer: A law that
applies to any person who, in the course of business, regularly
participates in credit decisions and includes banks, finance
companies and credit unions.
◉ EQUIPMENT TRUST. Answer: A trust established for the purpose
of purchasing and/or owning equipment for lease. Such trusts are
utilized in the leasing of major capital assets such as aircraft, ships
and railcars.
◉ EQUITY (INVESTOR). Answer: An ownership interest in a
business or property.
◉ EXEMPTION CERTIFICATE. Answer: A document that certifies
that a party to a transaction subject to sales tax is exempted from
sales tax liability under certain specified circumstances. The most
common exemption is for equipment being acquired for lease or re-
sale.
◉ FACTORIN. Answer: The assignment by a lessee or debtor of
accounts receivable to a lessor or creditor as collateral for a
specified term and payment amount, resulting in liquidity, which can
be used to improve cash flow or make capital equipment
acquisitions.
,◉ FASB 13. Answer: Statement of Financial Accounting Standards
No. 13 issued by the Financial Accounting Standards Boards. This
statement sets forth the generally accepted accounting procedures
for lessor and lessee accounting and financial statement reporting.
The criteria for meeting F ASB 13 classification of an operating lease
are: title for the equipment does not automatically transfer to the
lessee during, or by the end of, the lease term, there is no bargain
purchase price, the non- cancelable lease term is lesser than 75
percent of the asset's economic life and the present value of the
minimum lease payments, discounted at the lessor's interest rate
implicit in the lease, is less than 90 percent of the leased asset's fair
market value.
◉ FAIR CREDIT REPORTING ACT. Answer: A federal statute
administered by the Federal Trade Commission (FTC) that regulates
the collection, dissemination and use of consumer information,
including credit information.
◉ FAIR MARKET RENTAL. Answer: The expected rental in an open
market in an arm's length transaction for equivalent property under
similar terms and conditions.
◉ FAIR MARKET RENTAL RENEWAL OPTION. Answer: Option to
renew the lease for the fair market rental. The rental amount is
determined at the end of the initial term of the lease.
, ◉ FAIR MARKET VALUE. Answer: The value of a piece of equipment
if the equipment were to be sold in a transaction determined at
arm's length, between a willing buyer and a willing seller, for
equivalent property and under similar terms and conditions. Simply,
the actual market value of the leased asset.
◉ FARM CREDIT SYSTEM. Answer: A cooperative network of
agricultural borrowers that are governed by stockholders and
directors, which was established by Congress in 1916 in order to
provide a reliable source of credit for the nation's farmers and
ranchers.
◉ FIDUCIARY. Answer: A trustee.
◉ FINANCE LEASE. Answer: As most frequently used, a net lease,
which has as its purpose the financing of the use of property for a
major portion of the property's useful life. The term is typically used
in reference to leases written by third party lessors. The term is
often confusingly used to refer to a conditional sale in the form of a
lease transaction.
◉ FINANCING STATEMENT. Answer: A notice of security interest
filed under the Uniform Commercial Code (UCC). Under Revised
Article 9 of the UCC, it is filed with the Secretary of State in the state
in which the lessee is incorporated.
CTFP EXAM 2026 COMPREHENSIVE PRACTICE
TEST COLLECTION
◉ DRY LEASE. Answer: A net lease, traditionally for aircraft or
marine vessels, which specifically requires the lessee to procure all
personnel, fuel and provisions necessary to operate the craft.
◉ EARLY TERMINATION. Answer: The termination of a lease before
the end of its original term.
◉ EFFECTIVE LEASE RATE. Answer: Calculation of the rate utilizing
all cash flows in and out. When used to compare lease and loan
rates, the federal tax rate must be considered.
◉ END-OF-TERM OPTIONS. Answer: Options stated in the lease
agreement that give the lessee flexibility in its treatment of the
leased equipment at the end of the lease term. Common options
include purchasing the equipment, renewing the lease or returning
the equipment to the lessor. Options are sometimes given as an
amendment to the lease documents and are not made part of the
actual lease document. They may be a fixed dollar amount, a
percentage of equipment cost or fair market value.
,◉ EQUAL CREDIT OPPORTUNITY ACT (ECOA). Answer: A law that
applies to any person who, in the course of business, regularly
participates in credit decisions and includes banks, finance
companies and credit unions.
◉ EQUIPMENT TRUST. Answer: A trust established for the purpose
of purchasing and/or owning equipment for lease. Such trusts are
utilized in the leasing of major capital assets such as aircraft, ships
and railcars.
◉ EQUITY (INVESTOR). Answer: An ownership interest in a
business or property.
◉ EXEMPTION CERTIFICATE. Answer: A document that certifies
that a party to a transaction subject to sales tax is exempted from
sales tax liability under certain specified circumstances. The most
common exemption is for equipment being acquired for lease or re-
sale.
◉ FACTORIN. Answer: The assignment by a lessee or debtor of
accounts receivable to a lessor or creditor as collateral for a
specified term and payment amount, resulting in liquidity, which can
be used to improve cash flow or make capital equipment
acquisitions.
,◉ FASB 13. Answer: Statement of Financial Accounting Standards
No. 13 issued by the Financial Accounting Standards Boards. This
statement sets forth the generally accepted accounting procedures
for lessor and lessee accounting and financial statement reporting.
The criteria for meeting F ASB 13 classification of an operating lease
are: title for the equipment does not automatically transfer to the
lessee during, or by the end of, the lease term, there is no bargain
purchase price, the non- cancelable lease term is lesser than 75
percent of the asset's economic life and the present value of the
minimum lease payments, discounted at the lessor's interest rate
implicit in the lease, is less than 90 percent of the leased asset's fair
market value.
◉ FAIR CREDIT REPORTING ACT. Answer: A federal statute
administered by the Federal Trade Commission (FTC) that regulates
the collection, dissemination and use of consumer information,
including credit information.
◉ FAIR MARKET RENTAL. Answer: The expected rental in an open
market in an arm's length transaction for equivalent property under
similar terms and conditions.
◉ FAIR MARKET RENTAL RENEWAL OPTION. Answer: Option to
renew the lease for the fair market rental. The rental amount is
determined at the end of the initial term of the lease.
, ◉ FAIR MARKET VALUE. Answer: The value of a piece of equipment
if the equipment were to be sold in a transaction determined at
arm's length, between a willing buyer and a willing seller, for
equivalent property and under similar terms and conditions. Simply,
the actual market value of the leased asset.
◉ FARM CREDIT SYSTEM. Answer: A cooperative network of
agricultural borrowers that are governed by stockholders and
directors, which was established by Congress in 1916 in order to
provide a reliable source of credit for the nation's farmers and
ranchers.
◉ FIDUCIARY. Answer: A trustee.
◉ FINANCE LEASE. Answer: As most frequently used, a net lease,
which has as its purpose the financing of the use of property for a
major portion of the property's useful life. The term is typically used
in reference to leases written by third party lessors. The term is
often confusingly used to refer to a conditional sale in the form of a
lease transaction.
◉ FINANCING STATEMENT. Answer: A notice of security interest
filed under the Uniform Commercial Code (UCC). Under Revised
Article 9 of the UCC, it is filed with the Secretary of State in the state
in which the lessee is incorporated.
