1|Page
CANNON CTFA PREP EXAM | ACTUAL
QUESTIONS WITH VERIFIED ANSWERS
Stock prices are a ________ indicator.
A. leading
B. lagging
C. coincident
D. none of the above -correct-answer-A. leading
All of the following are leading economic indicators EXCEPT:
A. New orders for consumer goods and services
B. Manufacturing and trade sales
C. The S&P 500 stock index
D. Money supply -correct-answer-B. Manufacturing and trade sales
A value managers portfolio would be expected to:
,2|Page
A. have a PE ratio higher than the market.
B. sell at a premium to the S&P.
C. have a Beta equal to the market or less.
D. have a yield lower than the market. -correct-answer-C. have a Beta equal to the
market or less.
Indicate for the following condition the type of investment style each
characteristic would tend to represent on a relative basis.
Standard Deviation higher than the Market.
A. Growth
B. Value
C. Both -correct-answer-A. Growth
Which of the following best defines a caveat?
A. An amendment to a will.
B. An action filed in probate court objecting to a will.
C. An action filed in probate court to dismiss an executor.
,3|Page
D. The document issued by the probate court giving the executor official capacity
to act as a personal representative for decedent's estate. -correct-answer-B. An
action filed in probate court objecting to a will.
A US citizen living in Canada, died and was survived by a spouse, who is a citizen
of Canada. The estate valued at $8 million after expenses, passed to the surviving
spouse outright. How much of the surviving spouse's interest qualifies for the
marital deduction?
A. None. There is no marital deduction for assets passing to a non-citizen spouse.
B. $100,000 as indexed.
C. $10,000,000 as indexed.
D. Unlimited since the decedent is a U.S. citizen. -correct-answer-A. None. There is
no marital deduction for assets passing to a non-citizen spouse.
Franklin created a revocable trust with income payable to his son, Fred, after
Franklin's death. At Fred's death, the trust assets pass to Fred's son, Paul, if living,
or to Paul's issue per stirpes. Franklin died three years ago. He acted as trustee
until his death. Thereafter, Fred was successor trustee. Paul died last year, leaving
two daughters. Fred would like to disclaim any interest in the trust assets so that
they will be distributed to Paul's daughters, Freida and Sue. Which of the following
indicates whether Fred can make a qualified disclaimer, and why?
A. He can, if the disclaimer is properly executed and filed within 9 months after
Paul's death.
, 4|Page
B. He can, if the disclaimer is properly executed and filed within 9 months after
Paul's will is admitted to probate.
C. He can, if the disclaimer is executed and filed within 9 months after Paul's
death, but the disclaimer must be limited to Fred's actuarial in -correct-answer-D.
He cannot, since no disclaimer can be made that would be recognized for federal
transfer tax purposes at this point.
Keith died in November. In December, his company paid his estate $100,000 in
deferred compensation. Kieth left his entire estate to his brother Michael. Which
of the following tax returns will NOT be affected by this payment?
A. US Estate Tax (Form 706)
B. Keith's final US individual income tax (Form 1040)
C. Keith's estate's US fiduciary income tax (Form 1041)
D. Michael's US individual income tax (Form 1040) -correct-answer-B. Keith's final
US individual income tax (Form 1040)
A decedent passed away on September 18. Her income for the full year in which
she died was $85,000, of which $60,000 had been earned and received as of
September 18. How much income should be reported on the decedent's estate's
initial 1041 income tax return?
A. $25,000
B. $60,000
CANNON CTFA PREP EXAM | ACTUAL
QUESTIONS WITH VERIFIED ANSWERS
Stock prices are a ________ indicator.
A. leading
B. lagging
C. coincident
D. none of the above -correct-answer-A. leading
All of the following are leading economic indicators EXCEPT:
A. New orders for consumer goods and services
B. Manufacturing and trade sales
C. The S&P 500 stock index
D. Money supply -correct-answer-B. Manufacturing and trade sales
A value managers portfolio would be expected to:
,2|Page
A. have a PE ratio higher than the market.
B. sell at a premium to the S&P.
C. have a Beta equal to the market or less.
D. have a yield lower than the market. -correct-answer-C. have a Beta equal to the
market or less.
Indicate for the following condition the type of investment style each
characteristic would tend to represent on a relative basis.
Standard Deviation higher than the Market.
A. Growth
B. Value
C. Both -correct-answer-A. Growth
Which of the following best defines a caveat?
A. An amendment to a will.
B. An action filed in probate court objecting to a will.
C. An action filed in probate court to dismiss an executor.
,3|Page
D. The document issued by the probate court giving the executor official capacity
to act as a personal representative for decedent's estate. -correct-answer-B. An
action filed in probate court objecting to a will.
A US citizen living in Canada, died and was survived by a spouse, who is a citizen
of Canada. The estate valued at $8 million after expenses, passed to the surviving
spouse outright. How much of the surviving spouse's interest qualifies for the
marital deduction?
A. None. There is no marital deduction for assets passing to a non-citizen spouse.
B. $100,000 as indexed.
C. $10,000,000 as indexed.
D. Unlimited since the decedent is a U.S. citizen. -correct-answer-A. None. There is
no marital deduction for assets passing to a non-citizen spouse.
Franklin created a revocable trust with income payable to his son, Fred, after
Franklin's death. At Fred's death, the trust assets pass to Fred's son, Paul, if living,
or to Paul's issue per stirpes. Franklin died three years ago. He acted as trustee
until his death. Thereafter, Fred was successor trustee. Paul died last year, leaving
two daughters. Fred would like to disclaim any interest in the trust assets so that
they will be distributed to Paul's daughters, Freida and Sue. Which of the following
indicates whether Fred can make a qualified disclaimer, and why?
A. He can, if the disclaimer is properly executed and filed within 9 months after
Paul's death.
, 4|Page
B. He can, if the disclaimer is properly executed and filed within 9 months after
Paul's will is admitted to probate.
C. He can, if the disclaimer is executed and filed within 9 months after Paul's
death, but the disclaimer must be limited to Fred's actuarial in -correct-answer-D.
He cannot, since no disclaimer can be made that would be recognized for federal
transfer tax purposes at this point.
Keith died in November. In December, his company paid his estate $100,000 in
deferred compensation. Kieth left his entire estate to his brother Michael. Which
of the following tax returns will NOT be affected by this payment?
A. US Estate Tax (Form 706)
B. Keith's final US individual income tax (Form 1040)
C. Keith's estate's US fiduciary income tax (Form 1041)
D. Michael's US individual income tax (Form 1040) -correct-answer-B. Keith's final
US individual income tax (Form 1040)
A decedent passed away on September 18. Her income for the full year in which
she died was $85,000, of which $60,000 had been earned and received as of
September 18. How much income should be reported on the decedent's estate's
initial 1041 income tax return?
A. $25,000
B. $60,000
