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ABA CTFA Exam Questions
Certified Trust and Financial Advisor (CTFA) (Page 17 )

Updated On: 2-Mar-2026
Page 17 of 91
PDF with 895 Questions

Assume that you purchase a car for $20, 000 in September. You make a down payment of $3000 and finance the remaining amount $17000 with a 4-year, 5.5% installment loan payable monthly. Your September 30 income statement would show a cash expenditure of $3000, and each subsequent monthly income statement would your monthly loan payment of:

  1. $395
  2. $495
  3. $795
  4. $295

Answer(s): A



Calculating certain financial ratios can help you evaluate your financial performance over time. What's more, if you apply for a loan, the lender probably will look at the ratios to judge your ability to carry additional debt. Four important money management ratios are all of the following Except:

  1. Solvency ratio
  2. Liquidity ratio
  3. Savings account ratio
  4. Debt service ratio

Answer(s): C



The amount of liquid funds will vary with your personal circumstances and comfort level. Another useful liquidity guideline is to have a reserve fund equal to:

  1. 3 to 6 months of income
  2. 3 to 6 months of after tax income
  3. 4 to 8 months of after tax income
  4. 6 to 12 months of income

Answer(s): B



Even if, the annual balances, in certain months’ expenses may exceed income, causing a monthly budget deficit. Likewise, a surplus occurs when income in some months exceed expenses. It remedy may be:

  1. Shift expenses from months which budget, deficits to months with surpluses for, (or alternatively, transfer income, if possible, from months with surpluses to those with deficit)
  2. Use savings, investments, or borrowing to cover temporary deficits
  3. Estimate genuine expenses
  4. Pay off your credit card

Answer(s): A,B



It is the value today of an amount to be received in future; it is the amount that would have to be invested today at a given interest rate over a specified period of time to accumulate the future amount. What is it?

  1. Present value
  2. Discounted value
  3. Compounded value
  4. Lump-sum value

Answer(s): A



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