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ABA CTFA Exam (page: 18)
ABA Certified Trust and Financial Advisor (CTFA)
Updated on: 25-Dec-2025

Viewing Page 18 of 91
CTFA PDF 895 Questions

A technique used to reduce taxes in which a taxpayer shifts a portion of income to relatives in lower tax brackets.

  1. Income shifting
  2. Tax deferred
  3. Tax avoidance
  4. Tax Evasion

Answer(s): A



When using a probability tree approach, we discount the various cash flows to their present value at:

  1. The firm's weighted-average cost of capital
  2. The project's required rate of return
  3. The risk-free rate
  4. The after-tax cost of the firm's long-term debt

Answer(s): C



A managerial option, in effect:

  1. Limits the flexibility of management's decision-making
  2. Limits the downside risk of an investment project
  3. Limits the profit potential of a proposed project
  4. Applies only to new projects

Answer(s): B



The presence of managerial, or real, options the worth of an investment project.

  1. Increases
  2. Decreases
  3. Does not affect
  4. Increases or decrease

Answer(s): A



A firm's degree of operating leverage (DOL) depends primarily upon its:

  1. Sales variability
  2. Level of fixed operating costs
  3. Closeness to its operating break-even point
  4. Debt-to-equity ratio

Answer(s): C



Viewing Page 18 of 91



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