American Bankers Association CTFA Exam Practice Test Instant Access

Question 1

It is a formal, legal commitment to extend credit up to some maximum amount over a stated period of time.

ALetter of credit

BRevolving credit agreement

CLine of credit

DTrade credit

Answer : B

Question 2

End users need to hedge the prices at which they can purchase these commodities for instance:

AA University might want to lock in the price at which it purchases electricity to supply its air conditioning units for upcoming summer months

BAn airline wants to lock in the price of the jet fuel it needs to purchase in order to satisfy the peak in seasonal demand for travel

CA cotton producer wants to hedge his exposure to changes in the price of fertilizers or his end product (cotton)

DOnly A and B

Answer : D

Question 3

Medium-term notes (MTNs) have maturities that range up to:

AOne year (But no more)

BTwo years (but no more)

CTen years (but no more)

DThirty years (or more)

Answer : D

Question 4

Which of the following is also called the Gordon's Growth Model?

ADividend discount model

BBinomial models finance

CCapital asset pricing model

DBlack scholes model finance

Answer : A

Question 5

A best efforts offering is sometimes used in connection with a of new, long-term securities.

APrivate placement

BPrivileged subscription

CPublic issue

DAll of the above

Answer : C

Question 6

Which of the following has the assumptions of absence of personal taxes, single-period investment and riskless borrowing or lending?

AModern Portfolio Theory

BCapital Asset Pricing Model

CBinomial Options Pricing Model

DArbitrage Pricing Theory

Answer : B

Question 7

It is the value today of an amount to be received in future; it is the amount that would have to be invested today at a given interest rate over a specified period of time to accumulate the future amount. What is it?

APresent value

BDiscounted value

CCompounded value

DLump-sum value

Answer : A

American Bankers Association CTFA Certified Trust and Financial Advisor Exam Practice Test