American Bankers Association American Bankers Association Certifications CTFA Questions & Answers

• Question 801:

  Call provisions are often part of ______________, but usually not bonds issued by ______________.

  A. Zero coupon bond, Federal Government bonds

  B. Corporate bonds, Zero coupon bonds

  C. Corporate and municipal bonds, bonds issued by Federal Government

  D. None of these

  Correct Answer: C

• Question 802:

  Audit objectives that apply to one sales portion are all EXCEPT:

  A. Ensure that daily activity of each salesman is reviewed by head salesman

  B. Ensure that inventory is being accurately market to market on a continuing basis

  C. Ensure customer markups are reasonable relative to NASD

  D. None of these

  Correct Answer: B

• Question 803:

  Customer accounts:

  Ensure that the firm is exercising due diligence in the opening and supervision of customer accounts. The procedures should be formalized in writing and in accordance with the rules and regulations of the appropriate regulatory authority.

  Ensure that daily customer positions and option exercises are in accordance with the limits established by the appropriate exchange. Verify that commissions generated by customer trades are properly calculated and posted to the general

  ledger.

  A. This is one of the primary audit objectives of stock and options

  B. This is one of the primary audit objectives of swaps

  C. This is one of the primary audit objectives of bonds

  D. None of these

  Correct Answer: A

• Question 804:

  Occasionally, a company will issue additional shares of its stocks, called ____________, to raise additional capital.

  A. Secondary Offering

  B. IPO

  C. Private Placement

  D. Preferred Offering

  Correct Answer: A

• Question 805:

  The main objective/s of an audit of swaps is/are:

  A. To determine the adequacy and effectiveness of controls relating to rate swap transactions

  B. To ascertain that swap transaction are properly recorded in accordance with their term

  C. To ensure that the company's financial statements and regulatory reports properly reflect in accordance with generally accepted accounting principles, the results of swap activity

  D. All of these

  Correct Answer: D

• Question 806:

  Adequate procedures and controls associated with swap transactions should exist to help minimize the risks inherent in transaction process. Example/s of these controls may include:

  A. A daily reconciliation of traders' positions should be performed

  B. To minimize market risk in hedge transactions: There should be independent sign-off procedures for hedging models All hedge strategies should be clearly defined All software and products should be secure and temper resistant

  C. All transactions should be authorized and affirmed

  D. All of these

  Correct Answer: D

• Question 807:

  General Market indices in the commodities market with which many people would be familiar include:

  A. Goldman Sachs Commodities Index (GSCI)

  B. Commodities Research board

  C. Acme Tool and Die

  D. Both AandB

  Correct Answer: D

• Question 808:

  ____________ swaps give companies extra flexibility to exploit their comparative advantage in their respective borrowing markets.

  A. Fixed-floating swaps

  B. Currency swaps

  C. Interest rate swaps

  D. None of these

  Correct Answer: B

• Question 809:

  Standard and poor's 500 index, the Dow Jones Industrial average, or the Toronto stock Exchange index is the examples of:

  A. Equity indices

  B. Stock exchange indices

  C. OTC market indices

  D. All of these

  Correct Answer: A

• Question 810:

  An entity that purchases and sells securities on its own behalf is acting as:

  A. A broker

  B. A dealer

  C. An agent

  D. A principal

  Correct Answer: B