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ABA CTFA Practice Test - Questions Answers, Page 4

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Question 31

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Most financial planners fall into one of two categories based on how they are paid. Commission based planners earn commissions on the financial products they sell, whereas ______________ charge fees based on the complexity of the plan they prepare.

Free only planners
Free only planners
Commission based planners
Commission based planners
Professional planners
Professional planners
Security planners
Security planners
Suggested answer: A
asked 16/09/2024
Minh Phan
33 questions

Question 32

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When determining the interaction between the UK and EU on the regulation of the financial services industry, the UK government must always

seek approval from the European Commission before implementing any new regulations.
seek approval from the European Commission before implementing any new regulations.
implement new EU Directives by passing acts of Parliament.
implement new EU Directives by passing acts of Parliament.
accommodate all EU Decisions in UK legislation.
accommodate all EU Decisions in UK legislation.
provide copies of new regulation to the European Commission within a reasonable period of time for their approval.
provide copies of new regulation to the European Commission within a reasonable period of time for their approval.
Suggested answer: B
asked 16/09/2024
Wonseok Chung
27 questions

Question 33

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A client has previously written to her former adviser opting out of any marketing activities from the firm or any third parties. However she continues to receive direct investment offers from the firm. She should complain based on the firm not complying with which set of regulations?

Conduct of Business rules.
Conduct of Business rules.
Data Protection Act 1998.
Data Protection Act 1998.
Distance Selling Regulations.
Distance Selling Regulations.
Treating Customers Fairly.
Treating Customers Fairly.
Suggested answer: B
asked 16/09/2024
Darshak Ramdevputra
42 questions

Question 34

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The Financial Services and Markets Act 2000 regulates the provision of which type(s) of financial advice?

Advice to vulnerable individuals only
Advice to vulnerable individuals only
Advice to all individuals
Advice to all individuals
Advice to all individuals and group personal pensions schemes only
Advice to all individuals and group personal pensions schemes only
Advice to all individuals unless they are elective professional clients
Advice to all individuals unless they are elective professional clients
Suggested answer: B
asked 16/09/2024
Jonathan Marboux
39 questions

Question 35

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Simon has experience of dealing with retail clients and is now in training to qualify as a pension transfer specialist. As a consequence, which of the following statements are true?

He must have at least 3 years experience as an adviser before his training can commence
He must have at least 3 years experience as an adviser before his training can commence
His firm is allowed to impose a time limit on completion of the qualification
His firm is allowed to impose a time limit on completion of the qualification
His supervisor must also be suitably qualified
His supervisor must also be suitably qualified
Once qualified, CPD requirements are waived for 12 months
Once qualified, CPD requirements are waived for 12 months
Once qualified, records of his training must be maintained for at least 5 years
Once qualified, records of his training must be maintained for at least 5 years
Suggested answer: B, C
asked 16/09/2024
Aline Oliveira
48 questions

Question 36

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The efficient frontier curve shows the optimum balance between:

Risk and return
Risk and return
Return and taxation
Return and taxation
Taxation and risk
Taxation and risk
Inflation and return
Inflation and return
Suggested answer: A
asked 16/09/2024
David Sichimwi
43 questions

Question 37

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A UK investor holds a portfolio of overseas equities and is concerned about the exchange rate risk. Which strategy could he use to mitigate this risk?

Arbitrage
Arbitrage
Gearing
Gearing
Hedging
Hedging
Pound cost averaging
Pound cost averaging
Suggested answer: C
asked 16/09/2024
Luca Bombelli
40 questions

Question 38

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When constructing a portfolio for a UK resident basic-rate taxpayer who requires an income, the most tax efficient solution would be achieved by:

Only investing in offshore products
Only investing in offshore products
Holding fixed-interest funds within a stocks and shares ISA
Holding fixed-interest funds within a stocks and shares ISA
Purchasing National Savings & Investments (NS&I) Fixed-Interest Savings Certificates
Purchasing National Savings & Investments (NS&I) Fixed-Interest Savings Certificates
Holding high-yielding equities within a stocks and shares ISA
Holding high-yielding equities within a stocks and shares ISA
Suggested answer: B
asked 16/09/2024
Sérgio Filipe Soares
48 questions

Question 39

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The principal reasons for using the Sharpe ratio when calculating a portfolio's performance are:

It indicates the percentage return above/below the risk-free rate for each unit of risk taken
It indicates the percentage return above/below the risk-free rate for each unit of risk taken
It will always be quoted on a rolling quarterly basis
It will always be quoted on a rolling quarterly basis
A positive Sharpe ratio will always guarantee positive returns
A positive Sharpe ratio will always guarantee positive returns
The higher the number, the more a portfolio manager can be said to have added value
The higher the number, the more a portfolio manager can be said to have added value
Suggested answer: A, D
asked 16/09/2024
maria rocio ucha paz
47 questions

Question 40

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Pauline, a basic-rate taxpayer, has a portfolio which comprises of various equity and fixed-interest unit trusts and OEICs. She should be aware that:

Any losses from this portfolio are allowable for Capital Gains Tax calculations
Any losses from this portfolio are allowable for Capital Gains Tax calculations
Her entire portfolio will be subject to a 10% tax credit
Her entire portfolio will be subject to a 10% tax credit
Only the proceeds of sale from the OEICs could be subject to Capital Gains Tax
Only the proceeds of sale from the OEICs could be subject to Capital Gains Tax
The taxation of dividends on the OEICs held will be treated the same way as the unit trusts
The taxation of dividends on the OEICs held will be treated the same way as the unit trusts
She can never reclaim any tax deducted at source
She can never reclaim any tax deducted at source
Suggested answer: A, D
asked 16/09/2024
Spencer Karenbauer
41 questions
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