CANNON CTFA EXAM SCRIPT 2026 FULL
SOLUTION SET
◉ What are the four stages of the business cycle> Answer: Peak,
Contraction, Trough, Expansion
◉ Three major asset classes? Answer: Stocks, bonds, cash
◉ What policy is defined by the government's use of spending and
taxes to achieve economic and social goals, incl social security,
medicare.caid, defense/security, infrastructure, edu, deficit debt
Answer: Fiscal policy
◉ Increasing govt spending does what to the economy? Answer:
Stimulates economy
◉ Increasing taxes does what to economy? Answer: Slows economy
◉ What term is used for the manipulation of economic activity to
maintain the political party in power causing a bias to stimulate the
economy during election years? Answer: Political Business Cycle
,◉ What effect occurs when the government borrowing reduces the
amt of investment money for businesses and households to borrow,
drives up costs of borrowing, and drives down consumption and
investment spending? Answer: Crowding-out effect
◉ What policy is defined as when the Federal Reserve alters the
money supply and interest rates in an attempt to affect the
economy? Answer: Monetary Policy
◉ Medicare and Medicaid and social security account for what
percent of total federal budget? Answer: 26% and 22% damn near
50%
◉ Federal reserve is a ________ bank, not a department of US gov't.
Control __________ and ___________ Answer: For profit; controls money
supply and interest rates
◉ What form of ownership/property is legally titled in the name of
the living trust, which qualifies as separate legal ownership, and
avoids probate? Answer: Living Trust property
◉ What are the two economic goals of the federal reserve? Answer:
Control inflation, full employment
,◉ Four Tools of Monetary policy? Answer: Money supply
(Buying/selling securities to increase/decrease supply and liquidity)
Interest Rates ( Discount rate, fed funds rate)
Reserves ( percentage bank must keep on hand)
Margin Borrowing Rate
(Not tested)
Consumer credit rates, moral suasion
◉ Which 4 forms of property ownership avoid probate? Answer:
Joint tenancy,
Tenants by Entirety,
Contract Property with Valid beneficiary, and
Living Trust property
◉ What term is defined as the rate of interest banks pay when they
borrow money from their district federal reserve? Answer: Discount
rate
◉ What term is defined as the rate banks charge each other, above
the discount rate and is market driven Answer: Federal Funds Rate
◉ What 3 forms of property ownership pass via probate/Wills?
Answer: Sole Ownership
, Tenants in Common
Community Property (unless ROSurvivorship)
◉ If the feds are selling securities, increasing interest rates, reserve
requirements, and margin lending rates— what type of monetary
policy is the Federal Reserve operating under? What does raising
rates in US do in other countries? Answer: Tight/Restrictive money
policy; raising rates in US strengthens the US Dollar in other
countries
◉ If the feds are buying securities, reducing interest rates, reserve
requirements, and margin lending rates, what monetary policy are
they operating under? What does it do to the US dollar? Answer:
Easy/Accommodating Monetary policy; lowering rates in US
weakens US Dollar in other countries
◉ What two tools does President and Congress have to stimulate or
slow the economy of the US? Answer: Spend and Tax
◉ What are the four primary tools that the federal reserve bank
have to stimulate or slow down the economy? Answer: Buy/Sell
Securities in open marketplace
Raise/Lower interest rates
Increase/decrease reserve requirement, and
Borrowing
SOLUTION SET
◉ What are the four stages of the business cycle> Answer: Peak,
Contraction, Trough, Expansion
◉ Three major asset classes? Answer: Stocks, bonds, cash
◉ What policy is defined by the government's use of spending and
taxes to achieve economic and social goals, incl social security,
medicare.caid, defense/security, infrastructure, edu, deficit debt
Answer: Fiscal policy
◉ Increasing govt spending does what to the economy? Answer:
Stimulates economy
◉ Increasing taxes does what to economy? Answer: Slows economy
◉ What term is used for the manipulation of economic activity to
maintain the political party in power causing a bias to stimulate the
economy during election years? Answer: Political Business Cycle
,◉ What effect occurs when the government borrowing reduces the
amt of investment money for businesses and households to borrow,
drives up costs of borrowing, and drives down consumption and
investment spending? Answer: Crowding-out effect
◉ What policy is defined as when the Federal Reserve alters the
money supply and interest rates in an attempt to affect the
economy? Answer: Monetary Policy
◉ Medicare and Medicaid and social security account for what
percent of total federal budget? Answer: 26% and 22% damn near
50%
◉ Federal reserve is a ________ bank, not a department of US gov't.
Control __________ and ___________ Answer: For profit; controls money
supply and interest rates
◉ What form of ownership/property is legally titled in the name of
the living trust, which qualifies as separate legal ownership, and
avoids probate? Answer: Living Trust property
◉ What are the two economic goals of the federal reserve? Answer:
Control inflation, full employment
,◉ Four Tools of Monetary policy? Answer: Money supply
(Buying/selling securities to increase/decrease supply and liquidity)
Interest Rates ( Discount rate, fed funds rate)
Reserves ( percentage bank must keep on hand)
Margin Borrowing Rate
(Not tested)
Consumer credit rates, moral suasion
◉ Which 4 forms of property ownership avoid probate? Answer:
Joint tenancy,
Tenants by Entirety,
Contract Property with Valid beneficiary, and
Living Trust property
◉ What term is defined as the rate of interest banks pay when they
borrow money from their district federal reserve? Answer: Discount
rate
◉ What term is defined as the rate banks charge each other, above
the discount rate and is market driven Answer: Federal Funds Rate
◉ What 3 forms of property ownership pass via probate/Wills?
Answer: Sole Ownership
, Tenants in Common
Community Property (unless ROSurvivorship)
◉ If the feds are selling securities, increasing interest rates, reserve
requirements, and margin lending rates— what type of monetary
policy is the Federal Reserve operating under? What does raising
rates in US do in other countries? Answer: Tight/Restrictive money
policy; raising rates in US strengthens the US Dollar in other
countries
◉ If the feds are buying securities, reducing interest rates, reserve
requirements, and margin lending rates, what monetary policy are
they operating under? What does it do to the US dollar? Answer:
Easy/Accommodating Monetary policy; lowering rates in US
weakens US Dollar in other countries
◉ What two tools does President and Congress have to stimulate or
slow the economy of the US? Answer: Spend and Tax
◉ What are the four primary tools that the federal reserve bank
have to stimulate or slow down the economy? Answer: Buy/Sell
Securities in open marketplace
Raise/Lower interest rates
Increase/decrease reserve requirement, and
Borrowing
