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ABA CTFA Exam
Certified Trust and Financial Advisor (CTFA) (Page 12 )

Updated On: 26-Jan-2026
Page 12 of 91
PDF with 895 Questions

A profitability index of .85 for a project means that:

  1. The present value of benefits is 85% greater than the project's costs
  2. The project's NPV is greater than zero
  3. The project returns 85 cents in present value for each current dollar invested
  4. The payback period is less than one year

Answer(s): C



You want to buy an ordinary annuity that will pay you $4, 000 a year for the next 20 years. You expect annual interest rates will be 8 percent over that time period. The maximum price you would be willing to pay for the annuity is closest to:

  1. $32, 000
  2. $39, 272
  3. $40, 000
  4. $80, 000

Answer(s): B



With continuous compounding at 10 percent for 30 years, the future value of an initial investment of $2, 000 is closest to:

  1. $34, 898
  2. $40, 171
  3. $164, 500
  4. $328, 282

Answer(s): B



In an NPV sensitivity graph, a steep sensitivity line for a particular input variable means that a in that variable results in a in NPV.

  1. Small percentage change; large change
  2. Large percentage change; small change
  3. Large percentage change; large change
  4. Small percentage change; small change

Answer(s): A



It is a mortgage on personal property given as a security for the payment of an obligation.

  1. Chattel mortgage
  2. Lien
  3. Collateral note
  4. Loan application

Answer(s): A



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Viewing questions 56 - 60 out of 895 questions



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