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Certified Trust and Financial Advisor (CTFA) Questions 91–95 (page: 20)

Updated On: 9-Feb-2026

EBIT is usually the same thing as:

  1. Funds provided by operations
  2. Earnings before taxes
  3. Net income
  4. Operating income

Answer(s): D



In the context of operating leverage break-even analysis, if selling price per unit rises and all other variables remain constant, the operating break-even point in units will:

  1. Fall
  2. Rise
  3. Stay the same
  4. Still be indeterminate until interest and preferred dividends paid are known

Answer(s): A



This statistic can be used as a quantitative measure of relative "financial risk."

  1. Coefficient of variation of earnings per share (CVEPS)
  2. Coefficient of variation of operating income (CVEBIT)
  3. (CVEPS - CVEBIT)
  4. (CVEPS + CVEBIT)

Answer(s): C



Espinosa Coffee & Trading, Inc.'s common stock measured beta is calculated to be 0.75. The market beta is, of course, 1.00 and the beta of the industry of which the company is a part is 1.10. If Merrill Lych were to calculate an "adjusted beta" for Espinosa's common stock, that adjusted beta would most likely be .

  1. less than 0.75
  2. more than 0.75, but less than 1.10
  3. equal to 1.10
  4. equal to 0.95 {i.e., (1/3) x (0.75 + 1.00 + 1.10)}

Answer(s): B



What's the value to you of a $1, 000 face-value bond with an 8% coupon rate when your required rate of return is 15 percent?

  1. More than its face value
  2. Less than its face value
  3. $1000
  4. True

Answer(s): B



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