IIA Certified Government Auditing Professional IIA-CFSA Questions & Answers

• Question 41:

  A derivative with a convex payoff-profile at some point before the option's maturity is a simple plan vanilla option. As the option becomes progressively more-in-the money, the rate at which the position makes money increases until a sympathetically approaches the linear payoff of the future. Similarly, as the option becomes progressively more out-of the money, the rate at which the position loses money decreases until that rate becomes zero. This is an example of:

  A. Spot rate

  B. Non linear derivate

  C. Linear derivate

  D. None of these

  Correct Answer: B

• Question 42:

  Guaranteed investment contracts are contracts between:

  A. A bank and insurance company

  B. An insurance company and a corporate retirement plan

  C. A retirement plan and a brokerage house

  D. None of these

  Correct Answer: B

• Question 43:

  When one buys a cash instrument, for example 100 shares of ABC Inc., the payoff is linear (disregarding the impact of dividends). If share are purchased at $50 and the price appreciated to $75, we have ________ on a mark-to-mark basis.

  A. Made $2500

  B. Lost $2500

  C. Made $2500

  D. None of these

  Correct Answer: A

• Question 44:

  The benefits of tax deferral will out weigh the costs of a variable annuity only if the investor holds it as:

  A. Long-Term investment

  B. Short-Term investment

  C. Credit-Risk investment

  D. Annuity investment

  Correct Answer: A

• Question 45:

  I. Surrender Changes

  II. Mortality and Expense risk change

  III. Administrative Fees

  IV.

  Underlying funds expenses

  V.

  Fees charges for other features

  These are the charges which investors pay when they invest in:

  A.

  Variable annuity

  B.

  Fixed annuity

  C.

  Mixed annuity

  D.

  Both B and C depends upon situation

  Correct Answer: A

• Question 46:

  The accumulation phase in annuities can last from as long as:

  A. One day to five years

  B. One day to decades

  C. Ten days to ten years

  D. All of these

  Correct Answer: B

• Question 47:

  Annuities can be purchased through the following methods EXCEPT:

  A. Single payment deferred

  B. Periodic payment deferred

  C. Immediate payment

  D. Single payment accrued

  Correct Answer: D

• Question 48:

  The trustee is responsible for producing a schedule of distribution which includes information as:

  A. Assets and their current fair market value

  B. The method of distribution

  C. Each beneficiary's share of assets and the trust's liability

  D. All of these

  Correct Answer: D

• Question 49:

  To server as family and/or financial planning tool To provide for retirement To obtain favorable tax treatment These are the primary reasons

  A. For establishing a trust

  B. For naming an institution as trustee

  C. of Safekeeping

  D. of Custodial

  Correct Answer: A

• Question 50:

  Relief from administrative details and continuity are the major reasons for:

  A. Trust acceptance

  B. Trustee termination

  C. Naming a financial institution as a trustee

  D. Convenience and complete services of trusts

  Correct Answer: C