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ABA CTFA Exam
Certified Trust and Financial Advisor (CTFA) (Page 8 )

Updated On: 1-Feb-2026
Page 8 of 91
PDF with 895 Questions

Palo Alto Industries has a debt-to-equity ratio of 1.6 compared with the industry average of 1.4. This means that the company:

  1. Will not experience any difficulty with its creditors
  2. Has less liquidity than other firms in the industry
  3. Will be viewed as having high creditworthiness
  4. Has greater than average financial risk when compared to other firms in its industry

Answer(s): D



Dual classes of are common in new ventures where promotional usually goes to the founders.

  1. Bonds; bonds
  2. Preferred stock; preferred stock
  3. Common stock; common stock
  4. Warrants; warrants

Answer(s): C



Preferred shareholders' claims on assets and income of a firm come those of creditors those of common shareholders.

  1. Before; and also before
  2. After; but before
  3. After; and also after
  4. Equal to; and equal to

Answer(s): B



A call provision, a sinking fund, and/or conversion are used to retire:

  1. Bonds and preferred stock
  2. Bonds and common stock
  3. Preferred stock and common stock
  4. Only common stock

Answer(s): A



Treasury stock is:

  1. Common stock issued by the U.S. government
  2. Preferred stock issued by the U.S. government
  3. Common stock that has been repurchased and is being held by the issuing company
  4. A corporation's common stock outstanding

Answer(s): C



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