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ABA CTFA Exam (page: 15)
ABA Certified Trust and Financial Advisor (CTFA)
Updated on: 25-Dec-2025

Viewing Page 15 of 91
CTFA PDF 895 Questions

Probability-tree analysis is best used when cash flows are expected to be:

  1. Independent over time
  2. Risk-free
  3. Related to the cash flows in previous periods
  4. Known with certainty

Answer(s): C



You are considering two mutually exclusive investment proposals, project A and project B B's expected value of net present value is $1, 000 less than that for A and A has less dispersion. On the basis of risk and return, you would say that

  1. Project A dominates project B
  2. Project B dominates project A
  3. Project A is more risky and should offer greater expected value
  4. Each project is high on one variable, so the two are basically equal

Answer(s): A



If two projects are completely independent (or unrelated), the measure of correlation between them is:

  1. 0
  2. 0.5
  3. 1
  4. -1

Answer(s): A



Managerial options can be viewed as:

  1. Methods for reducing agency risk through the use of incentives
  2. Methods for reducing total firm risk through diversification
  3. Strategies for increasing management compensation
  4. Opportunities for altering management decisions in the future

Answer(s): D



Checkbook ledger:

  1. Is for informal use
  2. Is a booklet provided with a supply of check
  3. Used to maintain accurate record
  4. Both B and C are correct

Answer(s): D



Viewing Page 15 of 91



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JUAN 6/28/2023 2:12:00 AM

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