Cisco
CompTIA
ISC
EC-Council
EXIN
Fortinet
ITIL
Juniper
Microsoft
VMware
Avaya
SAP
Google
NVIDIA
Salesforce
Amazon
Palo Alto Networks
ISC2
Splunk
ServiceNow
All Vendors
  2. Home
  3. Exams
  4. ABA
  5. CTFA

ABA CTFA Exam
Certified Trust and Financial Advisor (CTFA) (Page 11 )

Updated On: 1-Feb-2026
Page 11 of 91
PDF with 895 Questions

The discount rate at which two projects have identical is referred to as Fisher's rate of intersection.

  1. Present values
  2. Net present values
  3. IRRs
  4. Profitability indexes

Answer(s): B



A project's profitability index is equal to the ratio of the of a project's future cash flows to the project's .

  1. Present value; initial cash outlay
  2. Net present value; initial cash outlay
  3. Present value; depreciable basis
  4. Net present value; depreciable basis

Answer(s): A



Assume that a firm has accurately calculated the net cash flows relating to an investment proposal. If the net present value of this proposal is greater than zero and the firm is not under the constraint of capital rationing, then the firm should:

  1. calculate the IRR of this investment to be certain that the IRR is greater than the cost of capital
  2. Compare the profitability index of the investment to those of other possible investments
  3. Calculate the payback period to make certain that the initial cash outlay can be recovered within an appropriate period of time
  4. Accept the proposal, since the acceptance of value-creating investments should increase shareholder wealth

Answer(s): D



Which of the following statements is correct?

  1. If the NPV of a project is greater than 0, its PI will equal 0
  2. If the IRR of a project is 0%, its NPV, using a discount rate, k, greater than 0, will be 0
  3. If the PI of a project is less than 1, its NPV should be less than 0
  4. If the IRR of a project is greater than the discount rate, k, its PI will be less than 1 and its NPV will be greater than 0

Answer(s): C



BackInSoon, Inc., has estimated that a proposed project's 10-year annual net cash benefit, received each year end, will be $2, 500 with an additional terminal benefit of $5, 000 at the end of the tenth year. Assuming that these cash inflows satisfy exactly BackInSoon's required rate of return of 8 percent, calculate the initial cash outlay. (Hint: With a desired IRR of 8%, use the IRR formula: ICO = discounted cash flows.)

  1. $16, 775
  2. $19, 090
  3. $25, 000
  4. $30, 000

Answer(s): B



Viewing page 11 of 91
Viewing questions 51 - 55 out of 895 questions



Post your Comments and Discuss ABA CTFA exam prep with other Community members:

Join the CTFA Discussion