American Bankers Association American Bankers Association Certifications CTFA Questions & Answers

• Question 811:

  Which of the following statements about the over-the-counter market is false?

  A. Mutual funds and other new issues are initially issued over the counter

  B. Security prices are determined through auction bidding

  C. Broker dealers must be resigned

  D. Securities are traded at many locations throughout the country

  Correct Answer: B

• Question 812:

  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 813:

  One of the largest components of the global derivative markets and natural adjunct to the fixed income markets is the:

  A. Volatility

  B. Interests rate Swaps

  C. Commodity Swaps

  D. Both B and C

  Correct Answer: B

• Question 814:

  A gold producer wants to hedge his loses attributable to a fall in the price of gold for his current gold currency. This is an example of:

  A. Currency Swaps

  B. Commodity Swaps

  C. Interests rate Swaps

  D. All of these

  Correct Answer: B

• Question 815:

  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 816:

  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 817:

  I. Surrender Changes

  II. Mortality and Expense risk change

  III. Administrative Fees

  IV.

  Underlying funds expenses 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 818:

  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 819:

  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 820:

  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