Cannon Financial Institute CFIRS Practice Exam

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• In the exchange markets, the bid represents the:
• What does a higher yield to maturity indicate about a bond?
• What characteristic does a negotiable certificate of deposit possess?
• What is the designation for a control person who can influence the management decisions of a corporation?
• Under ERISA regulations, loans to participants are subject to certain conditions. Which of the following is a valid condition?
• What does the Trust Committee need to do to fulfill its supervisory responsibilities?
• Your institution holds 100,000 par value of ABC Municipal Bonds. If 20,000 par value of the holding has been called, how should the call be processed?
• What factor should management consider before accepting a trust account?
• Which fiduciary duty involves ensuring that investments align with the specified goals of the trust?
• Which rule is not set forth in ERISA as a general duty of fiduciary?
• Who is responsible for the investment of cash collateral in securities lending?
• The term "account corpus" refers to:
• What is the first trading day when the seller is entitled to receive the dividend for a stock?
• A 52-week Treasury bill is offered every?
• Preferred stock is attractive to investors primarily because it:
• Which of the following is a common feature of U.S. Treasury securities?
• What type of underwriting assures that the issuing corporation receives the full amount of the offering and retains any unsold shares?
• What is a significant disadvantage of operating common trust funds of type 9.18(a)(1)?
• A fiduciary of a trust organization is prohibited from engaging in which of the following activities?
• Your institution has a security out on loan when a proxy record date is announced. To maintain your right to vote, you should:
• A gift of income to charity with a remainder to children is an example of which type of trust?
• When a trust department delegates its investment responsibility to a third party, it should?
• Which type of account administration includes acting as bond indenture trustee?
• A broker-dealer underwriting a GO issue on a best-efforts basis is required to:
• Which of the following accurately reflects the function of the Legal department in risk management?
• What type of fund pools money from multiple investors to purchase stocks, bonds, or other securities?
• What is the maximum lump-sum distribution allowed from a qualified plan without written spousal consent?
• What department is typically responsible for monitoring securities in a broker-dealer firm?
• What type of funds are banks prohibited from advertising?
• The interest on bonds issued by U.S. territories is exempt from which types of taxes?
• When determining eligibility for a benefits plan, what is NOT affected by service?
• What is defined as a record that comprises all control accounts of the institution?
• Which of the following is NOT a component of a Master Plan utilized by a financial institution for a qualified retirement?
• What is the primary difference between trust accounts and agency accounts?
• Which of the following risks is considered the most significant risk faced by a bank from its corporate trust activities?
• What does 12 CFR 9 require from a national bank regarding a written policy?
• Which of the following types of underwriting requires the underwriters to sell the entire offering to the public?
• Which type of stock can be exchanged for common stock at a constant ratio?
• If a callable bond is called, what amount does the issuer have to pay?
• What is stock that has been issued but later reacquired by the issuing corporation called?
• Which of the following is considered a crucial role of the chief compliance officer?
• Which document is not typically part of an investment adviser's compliance program?
• Which of the following describes the tax consequences to a corporation for establishment of a qualified retirement plan?
• What type of preferred stock allows the owner to exchange it for common stock under specific terms?
• Per 12 CFR 9.18, how frequently must collective investment funds be valued?
• What type of offering allows unsold items to be returned to the issuing corporation?
• How often do most corporate and municipal bonds pay interest to bondholders?
• In a QTIP marital deduction trust, which power maximizes the surviving spouse's control while retaining options for the executor?
• When reviewing charge-offs, what is a compliance officer primarily responsible for?
• Which approach is discouraged when managing personal trust accounts?
• XYZ convertible debentures can be converted into how many shares of XYZ Corporation common stock?
• What is one primary function of a stock registrar?
• What is a characteristic of a debenture?
• When appointing investment managers under ERISA Section 3(38), which is NOT a criterion for consideration?
• What action must be taken when all beneficiaries agree to change the terms of a trust?
• When acting as a principal, what charge will a securities firm typically impose?
• A borrower is considered to have defaulted on a loan if he fails to?
• Which aspect of trust management indicates the fiduciary duty of trustees?
• What does the Securities Exchange Act of 1934 primarily regulate?
• Which of the following are secured by a corporation's assets EXCEPT?
• Agent is synonymous with the term ___ and means purchasing or selling for ___.
• How frequently does Regulation 12 CFR 9 require fiduciary accounts to be reviewed?
• Which statements are accurate regarding operations for corporate trust accounts?
• A 5.5% preferred stock with a par value of $100 would pay someone owning 300 shares what amount?
• What might indicate that an auditor should review the incentive structure within an organization?
• Who benefits from a charitable remainder trust when it comes to income distribution?
• The market price of a Treasury security is primarily influenced by?
• Which type of information is generally acceptable in advertisements?
• The exercise of fiduciary powers by national banks is primarily governed by which regulation?
• Which statement about QDROs (Qualified Domestic Relations Orders) is FALSE?
• All of the following organizations provide insurance for municipal bonds EXCEPT?
• Rule 144 is derived from which of the following Acts?
• Which Moody's rating indicates a speculative bond?
• Which of the following does not hold an insurable interest in a person's life?
• What is the primary concern of the Board of Directors during the administration of fiduciary powers?
• If the governing instrument is silent with respect to reserves for depreciation or depletion, the trustee:
• What principle must fiduciaries adhere to when determining investment strategies for clients?
• Who is the annuitant in an annuity contract?
• Which statement about Federal funds is false?
• What is a Regulation A offering?
• The measure of an asset's price sensitivity to changes in the market is known as?
• What is an example of a compliance activity that contributes to effective regulatory oversight?
• Which type of bond is secured by assets and usually has a priority claim on those assets?
• Which U.S. Treasury securities are issued and traded at a discount?
• Under modern portfolio theory, what is the main focus when evaluating investment performance?
• How much should a holder of non-cumulative preferred stock with a $7 dividend receive if dividends were not paid last year?
• Which of the following is NOT a characteristic that audit evidence should have?
• Employer profit-sharing contributions are referred to as:
• Which of the following is a consequence of not properly managing conflicts of interest?
• What is one goal that is NOT associated with ERM practices?
• A trust organization has a fiduciary duty of loyalty to whom?
• The over the counter market (OTC) is used to describe trading securities that:
• In bond ratings, which rating implies the highest credit quality?
• What is the due date for filing an estate tax return (Form 706)?
• What act is referred to as the "truth in securities" act?
• Asset management primarily focuses on meeting the needs of which beneficiaries?
• Which factors are assessed for operations, internal controls, and auditing ratings?
• Which type of stock is typically associated with fixed dividends?
• Which of the following is NOT true of joint tenants with right of survivorship ownership between spouses?
• Which of the following is considered a source of fiduciary liability?
• In which situation is a corporate trustee allowed to lend to its own officers?
• Employee contributions to a retirement plan:
• The following category(ies) of qualified retirement plans can be integrated with Social Security:
• Which significant risk is NOT associated with providing Trustee Services to Retirement plans?
• Which of the following is an example of tangible personal property?
• Why should the trust compliance officer act as a liaison with the preliminary bank regulator?
• Dividends are paid to holders appearing on the company’s books as of:
• What must a fiduciary do if they cannot dispose of improper investments within the required timeframe?
• What is the maximum maturity period for a Treasury note?
• A married couple wishes to gift as much as possible to their four children without making any taxable gifts. What is the total amount they can give each year?
• Which U.S. Treasury security is known for having no periodic interest payments?
• What is the maximum maturity for commercial paper?
• What date determines a seller's entitlement to cash dividends on exchange-traded equities?
• Which type of IRA allows for direct tax-deductible contributions from an employer?
• What is a primary feature of a treasury bill?
• What is a lender institution offering customer securities on an undisclosed basis considered?
• What is a requirement for brokers and dealers to operate in the Over-The-Counter market?
• In the secondary market, which price reflects the amount a customer will pay to buy securities?
• Can the Board of Directors delegate ultimate responsibility for operating the trust institution?
• Which document is typically used to transfer ownership of shares in a corporation?
• Which of the following is NOT recommended by the OCC for quality risk management?
• A qualified personal residence trust allows the grantor to do what?
• What high-risk aspect is crucial in managing collective investment funds?
• What is the primary purpose of using a target benefit plan?
• Which aspect was not a concern of the OCC regarding operational risk in Qualified Retirement Plan Services?
• In managing a common trust fund, what is a potential benefit of obtaining client approval before asset transactions?
• According to ERISA, which of the following transactions between an employee benefit plan and a party-in-interest is permitted?
• When was the Uniform Interagency Trust Rating System (UITRS) adopted?
• What does the beta coefficient measure?
• What does the call premium of a bond refer to?
• Which type of transfer during life is considered completed concerning the decedent’s estate?
• What role does the ex-date play in the context of equity dividends?
• What financial instrument can be converted into stock at a predetermined price?
• Which of the following is an advantage of permanent life insurance?
• When does a trust typically become irrevocable?
• What should a bank do when an heir wants to purchase an antique from a decedent's estate?
• Which skill is not a requirement for an investment adviser's chief compliance officer according to the SEC?
• What relationship does an indenture create?
• The SEC's Compliance Program Rule requires policies and procedures to be designed to:
• Which of the following is a common method for determining contributions in a money purchase plan?
• If a municipal bond bought in the secondary market is held until maturity, which of the following statements are true?
• Which of the following acts protects investors with full and fair disclosure of new securities issues?
• What is protected preferred stock primarily designed to do?
• Are some conflicts of interest permissible if authorized by applicable law?
• Is a revocable trust document drafted by the grantor considered applicable law according to 12 CFR 9.2(b)?
• The basic elements of a sound risk-management system for fiduciary activities include all of the following except:
• Employers maintain the greatest flexibility in contribution amounts to a qualified retirement plan by adopting a:
• State laws concerning the registration and issuance of securities are commonly known as?
• Which of the following is NOT exempt from the provisions of the Securities Act of 1933?
• According to Regulation 12 CFR 9, how often must a bank administering a Common Trust Fund prepare a financial report?
• During the term of a loan, the lender relinquishes his right to?
• Why is frequent communication with account beneficiaries important in personal trust administration?
• An inter vivos trust is characterized by which of the following?
• What is an appropriate action for Fred, the senior vault custodian, when assisting a short-staffed income unit?
• A purchaser of stock from a market-maker in that stock can expect to pay:
• Under the regulations for trust operations, when must confirms be sent for non-discretionary accounts?
• What is a primary regulatory agency overseeing 401(k) plan compliance under ERISA?
• Choosing not to invest in an (a)(1) fund typically means losing what benefit?
• Which factor would have the least significant impact on the earnings level of a large trust department?
• Which factor is NOT considered when evaluating earnings at a small trust department?
• In the transfer "A to B for life, then to C," what kind of interest does C have?
• As an executor of an estate, which piece of information is least important when a client dies with assets in his own name?
• Which of the following bonding methods can back a general obligation bond?
• Which legal provision allows a donation to an irrevocable trust to qualify for the annual present interest exclusion?
• What is the characteristic feature of Treasury bonds?
• In terms of interest rate risk, which security is typically the least sensitive?
• When evaluating the management's competence, which factors should be looked at?
• What federal securities law mandates full disclosure of all information related to a new security issue?
• A money purchase plan is a type of:
• Which of the following is not an objective of an audit of trust activities?
• Which aspect is crucial for the protection of collective investment fund participants?
• Which of the following documents provides full disclosure of all relevant information to investors in a new issue of a limited partnership?
• What does an "all or none" offering imply for an underwriting syndicate?
• According to fiduciary standards, bank trust departments are allowed to purchase what types of investments?
• Why is diversification important in investment policy?
• What happens to the property in a qualified personal residence trust if the grantor survives the term?
• If there is a conflict between Principal and Income Law and tax law, what must the Trustee do?
• What are the primary risks associated with products offered through broker-dealer firms?
• Which type of retirement plan generally offers more predictable benefits for employees in their retirement years?
• The Shareholder Communication Act of 1985 (SCA) requires financial institutions to disclose to issuers the beneficial owners of the issuer's securities, if the beneficial owner does not object to the disclosure. Objecting to the disclosure is known as:
• In the event of the liquidation of a corporation, the common stockholders:
• This duty requires a fiduciary to act fairly with respect to each class of beneficiaries, consistent with the terms of the governing document.
• What does a deferred annuity primarily function as?
• A trust institution's profitability is affected by which of the following?
• Which underwriting type withdraws the issue if the entire amount is not sold?
• What is an example of unsystematic risk?
• What type of bonds did the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) effectively eliminate?
• When is interest paid on zero coupon bonds?
• What is the likely consequence for a trust institution found to have violated OCC Regulation 9.18?
• What is a common activity performed by broker-dealers in relation to mutual funds?
• A bank fiduciary may rely on the beneficiary approval to engage in self-dealing transactions provided what condition is met regarding documentation?
• A Yankee bond is typically issued by which type of entity?
• Corporate bond quotes can be found in the:
• What type of market is NASDAQ classified as?
• How does the OTC market differ from an organized exchange market?
• Which statement correctly differentiates between (a)(1) and (a)(2) funds?
• Why is it important to include fiduciary activities in an institution's overall strategic plan?
• When the trade settlement record of the delivering party and the receiving party do not agree, the trade is:
• What happens to a stockholder's dilution of interest if they do not exercise their rights?
• What is a summary record that provides details about the legal documents governing the account?
• Which group does NOT typically form part of the management of a trust institution?
• Which is NOT a tenet of the Statement of Principles of Trust Management?
• Which of the following methods would be the least equitable for allocating partial fills of aggregated trade orders?
• What are the basic fiduciary principles that a fiduciary must comply with?
• Which of the following should not be a basis of an investment policy?
• What is an advantage of a charitable lead trust as compared to other trusts?
• What defines the dividend structure of a participating preferred stock?
• What constitutes management within a fiduciary institution?
• Which of the following statements is TRUE regarding the Internal Revenue Service (IRS) and Department of Labor (DOL) in relation to ERISA?
• What is the minimum loan amount a qualified plan may establish by policy?
• The price printed on the face of a stock certificate represents the:
• According to SEC Rule 17Ad-2, what is the processing requirement for transfer agents regarding routine transfers?
• Which of the following is not a defined contribution plan subject to ERISA?
• What type of instrument is a bankers' acceptance?
• If the instrument and state law are silent, can a bank trustee defer an investment decision to an individual co-trustee?
• A trustee may have the authority to make decisions about managing the assets of an account if it has ____ powers?
• In terms of powers of appointment, what does a 5x5 power permit?
• What role does the board play in defining risk appetite in an organization?
• Which law governs an initial public offering (IPO) for companies like Biomedics Corporation?
• Which bond does NOT provide an investor with cash flow?
• Which of the following laws and regulations do trust examiners typically not assess compliance with?
• Federal Reserve guidance requires that approved account objectives and investment strategies should be reviewed at least?
• Which type of investment is characterized as having low risk and yet offers a steady income stream?
• Which agency is responsible for overseeing the securities industry in the United States?
• In the context of retirement plan services, which area is considered a low risk according to the OCC?
• Which of the following is important when evaluating risk in the context of fiduciary duties?
• Compared to bonds, money market investments tend to possess:
• What has primarily contributed to the rise of Enterprise Risk Management?
• How is a testamentary general power of appointment taxed?
• When is an estate tax return (Form 706) required to be filed for a U.S. citizen?
• Which of the following does NOT pay dividends?
• What is one of the purposes of reinsurance?
• According to the Uniform Prudent Investor Law, if a bank trust department uses an outside investment service, what is required?
• According to the IIA, which element is NOT required in an audit report?
• What is the main purpose of a convertible preferred stock?
• What do ERISA 404(a)(1): (A), (B), (C), and (D) govern?
• Which statement about a trust institution's fee structure is correct?
• What do investors receive from cumulative preferred stock when dividends are missed?
• What is the primary risk associated with investing in a Government National Mortgage Association (GNMA) fund during a period of falling interest rates?
• What is the primary regulatory purpose of the Securities Exchange Act of 1934?
• All of the following are common-law fiduciary principles except:
• Which type of insurance typically has cash value accumulation?
• Which responsibility is NOT of the board of directors in establishing a proper tone at the top?
• You are settling the purchase of a municipal bond with a trade date of August 15th. The bond pays interest on June 1st and December 1st. How many days of accrued interest will be included in the settlement expense?
• Who is responsible for regulating how securities are sold?
• What best defines the role of a custodian under the Uniform Gifts to Minors Act?
• A securities lending transaction is the temporary transfer of a security to a borrower with all of the following characteristics except?
• What is one requirement for an employee benefit plan to permit prohibited transactions?
• Which financial regulation prohibits unfair or deceptive practices in the sale of securities?
• What is a key factor for assessing the success of a trust department?
• Sylvester wants to gift as much as possible to his three children without making taxable gifts. What is the total amount he can give each year?
• Preferred stock that allows repayment of a dividend under certain conditions is known as what?
• A legal opinion on a bond does NOT cover which of the following?
• Which of the following should NOT be added to the net demand deposit account balance when assessing pledged assets?
• Which type of bond is guaranteed by the U.S. Government?
• Interest on U.S. Treasury bills is calculated using which of the following methods?
• What type of risk is avoidable through diversification?
• Situations that raise actual or potential conflicts of interest may be permitted provided they are authorized by?
• How will the assets of an unmarried man who dies intestate in a community property state be distributed?
• On which of the following dates do commercial paper and bankers' acceptances generally settle?
• What is a defining characteristic of the Over-The-Counter market?
• Where can quotes for over-the-counter securities ineligible for listing on NASDQ be found?
• The efficient market hypothesis implies that?
• Before approving amendments to the plan language governing its common trust fund, what should the board of directors ensure does not result from this amendment?
• When are fiduciaries held liable for breaches under ERISA?
• What is the primary concern of rating organizations?
• What should a broker-dealer do if a new account application is incomplete?
• If you own a 7% bond maturing in twenty years, and long term rates rise to 10%, what will happen to your bond?
• What potential disadvantage exists for contract owners who take systematic withdrawals from an annuity?
• What is included in the definition of personal property?
• A corporate bond pays interest on January 1st and July 1st. If the bond is purchased on May 31st, how many days of accrued interest will the buyer pay the seller?
• What constitutes a borrower as being in default on a loan?
• What must a bank fiduciary obtain to conduct business with related brokers?
• What is the primary role of the Legal department in bank risk management?
• How does preferred stock differ from common stock?
• Which policy is not specifically required under the Compliance Program Rule?
• Which of the following reflects the priority of claims in the event of corporate dissolution?
• What is a key responsibility of an internal auditor?
• The primary reason an investment adviser might participate in a securities lending program is?
• Which of the following might be a consequence of a bank's failure to maintain accurate records as a trustee?
• Which action is considered the best adherence to the "prudent man rule" according to the Trust Indenture Act of 1939?
• What is the essential characteristic of a rights offering?
• What is the fundamental difference between a Series 6 and a Series 7 license?
• The stock of a company with a growth rate twice the market would be expected to have a:
• In the event of liquidation, which claimant ranks first?
• What type of trust can allow the grantor to dictate how the income can be distributed to beneficiaries?
• Which type of security is subject to registration under the Securities Act of 1933?
• Which of the following is a characteristic of a negotiable certificate of deposit?
• In a Risk Management structure, why is it important for banks to confirm their documentation?
• What factors should management consider before purchasing trust software programs or outsourcing IT functions?
• Under what condition can a national bank hold its own stock in trust accounts?
• What is NOT a characteristic of a successful risk assessment process?
• The management of a trust institution consists of all but which of the following?
• How frequently must auditors responsible to the board of directors prepare an audit of common and collective funds?
• For eligibility purposes, the initial year of service is based on what?
• Examiners should consider all but which of the following factors when assessing internal control practices?
• Which of the following statements is true regarding warrants?
• What type of cash results from the sale or exchange of the account's investment?
• Which of the following does NOT help set a proper tone at the top?
• What is the primary role of an audit program in a financial institution?
• Why is monitoring contributions critical in retirement plan services?
• What does ERISA regulate primarily?
• Which of the following regulations in the Securities Exchange Act of 1934 governs the extension of credit by banks to their customers for the purpose of carrying margin securities?
• Which of the following could result breach of fiduciary duty?
• What must the Trust Audit Committee of a national bank report to the Board of Directors according to 12 CFR 9.9?
• Cash received from unclear transactions, like distributions from a limited partnership are:
• Which organization is the governing authority for the OTC market?
• An investor purchased T-notes that mature on July 1, 1999, on February 20th. How many days of accrued interest did the investor owe?
• Under what conditions can a corporate trustee purchase its own bank stock in a fiduciary account?
• What characterizes a double barreled security?
• Who sets the requirements for securities to be eligible for deposit in a depository?
• Under the Securities Act, what type of securities offers the least amount of regulatory burden?
• When faced with an irrevocable living trust that becomes impracticable, what should a trustee do?
• What type of risk is market risk considered?
• A profit sharing plan may include all of the following EXCEPT:
• What authorizes a plan to offer participant loans under ERISA?
• What is an essential component of a comprehensive Risk Management discussion in banks?
• Which of the following is NOT a fiduciary duty?
• A testamentary trust is created by what means?
• What is required for a national bank to retain stock held in a trust account?
• How will the estate of Dad D, who died intestate, be distributed among his children?
• Which of the following is an example of a bond's yield?
• Which Moody's rating represents the most speculative bond within investment grade?
• A qualified plan loan must typically be repaid within how many years to avoid being taxed as a distribution?
• What type of power of attorney remains valid despite the principal's incapacitation?
• A bank trust organization serving as a fiduciary has an exclusive duty of loyalty to which of the following?
• What risk is associated with a fiduciary's duty of undivided loyalty?
• Which of the following types of bonds is backed by a portfolio of stocks and bonds owned by the issuer?
• What is the risk measure for the volatility of an international portfolio?
• What type of account is the trust department least likely to accept as new business?
• What is the gift tax annual exclusion amount per donee for gifts of present interest?
• Which aspect of a bank trust department is NOT considered essential for its functioning?
• Cumulative preferred stock refers to stock:
• What characteristics generally distinguish a Roth IRA from a Traditional IRA?
• What must the firm element of continuing education ensure?
• When must a trustee remain impartial among beneficiaries?
• A QTIP trust does which of the following?
• Which of the following describes a debenture?
• The OCC requires a national bank to review securities. Which securities should it review?
• Which feature characterizes a defined contribution plan?
• Which of the following is NOT allowed under OCC Regulation 9?
• The asset administration function is subject to various state and federal laws and regulations. True or False?
• When determining if a benefit plan is qualified, which document is crucial according to the IRS?
• Which of the following terms describes bonds that are subject to default risk?
• What may result from an auditor's finding of inadequate segregation of duties?
• A person who undertakes to act on behalf of or for the benefit of another is called a:
• Income payments on repo collateral securities held at the FRB are paid to the:
• According to fiduciary practices, a trust organization is expected to prioritize what aspect regarding its beneficiaries?
• What is a convertible bond?
• Which of the following activities is typically associated with the operations of an employee benefit plan administrator?
• What does the efficient frontier illustrate, as introduced by CAPM?
• What is one of the primary metrics used to assess compliance effectiveness?
• Money market funds primarily invest in what type of securities?
• What must the investment manager be to act as a fiduciary under ERISA?
• Who should operations notify in addition to internal auditors during a vault audit when securities are noted as missing?
• What is the primary purpose of the summary plan description under ERISA?
• Which of the following constraints is a fiduciary not subject to when managing account assets?
• A bond is convertible at 40. If the bond is currently selling at 113 and the corporation calls the bond for redemption at 107, what action is a bondholder most likely to take?
• Which of the following risks is typically associated with fiduciary activities?
• Which of the following is classified as a discontinued debt instrument?
• Which bond characteristic indicates it can be exchanged for stock?
• Which characteristics do products offered through a broker-dealer NOT have?
• Diversification primarily reduces which type of portfolio risk?
• An eight percent (8%), twenty (20) year bond selling at a discount will have a:
• Which of the following was created by the Securities Exchange Act of 1934?
• What does not classify as an advertisement when directed at multiple persons?
• Annual reports to the government on retirement pension/profit sharing plans are filed on Form 5500. The 5500 report is filed with the:
• Which of the following is not a duty of a trustee upon termination of an account?
• At what point during the audit should findings be communicated to the auditee?
• The use of marginable securities is governed by which FRB Regulation?
• Which of the following securities must be included in personal transaction reports to the chief compliance officer?
• Which document governs the actions of registered representatives in a broker-dealer?
• Individual contribution limits to Qualified Retirement Plans do not include:
• Which of the following addresses the duty of prudence?
• Which type of account administration includes the commingling of several accounts administered by the trust department?
• What is the primary purpose of the Securities Act of 1933?
• A Eurobond issued in U.S. dollars can NOT be sold in the primary market to investors in which of the following countries?
• What is the minimum denomination of Treasury bills?
• Who may the Board of Directors assign their fiduciary powers to according to their discretion?
• In a securities lending arrangement, which party maintains beneficial ownership of the securities?
• In estate planning, what is the significance of a power of appointment?
• In which type of IRA does the employer make tax-deductible contributions?
• When do transactions involving an option contract typically settle?
• A trust institution's policies should include all of the following except:
• How should the purpose, authority, and responsibility of the internal audit activity be defined?
• Which significant factor has been linked to major loss events in the financial industry?
• Which of the following is considered an exempt transaction under ERISA?
• A type of investment often used to accommodate requirements of the Uniform Principal and Income Act (UPIA) for uninvested fiduciary cash overnight is a:
• In asset management, which factor does NOT typically influence competitive advantage?
• Which of the following is essential for a fiduciary to include as part of their investment process?
• The term "defined benefit plan" refers to which of the following:
• A money purchase plan allows a company to base its annual contribution to the plan on:
• What document provides the most comprehensive details about a new municipal issue?
• Which of the following data elements is NOT typically included in the description of a corporate fixed income security?
• A municipal bond issue secured by the income from a bridge or toll road is called what?
• Which of the following options would likely NOT be considered a conflict of interest?
• What is the requirement for a national bank regarding the management of non-real estate assets?
• Which provision under the "Investment Authority/Permitted Investments" section is likely to be eliminated from a trust indenture?
• A non-deposit trust company saw a drop in total assets from $106 million to what amount?
• How should a Trustee proceed if service law contradicts tax law?
• What type of retirement plan does not require the same degree of fiduciary standards as those outlined in ERISA?
• Which type of trust can a grantor create during their lifetime?
• The trading of securities in the secondary market is regulated by the:
• Which federal agency primarily enforces fiduciary rules for retirement plans?
• Which of the following is the nominal or face value of a security?
• An investor is MOST likely to receive regular interest payments from:
• Regarding a financial holding company's board determination for a new registered investment advisory company subsidiary, how should trust company earnings be evaluated?
• Why might a client be unable to vote his proxy for a specific stock?
• Which of the following must be true for deposits in employee benefit accounts to be compliant?
• How are dividends for cumulative preferred stock characterized?
• What must a bank do if it has a defaulted fixed income asset in its common trust fund?
• Which types of financial institutions must comply with local law regarding fiduciary powers?
• Which document outlines the fiduciary responsibilities for investment managers under ERISA?
• Outsourcing trust account processing reduces a trust institution's need to monitor operational risk. Is this statement true or false?
• Which of the following statements is incorrect regarding common and collective funds?
• Loans from a retirement plan that are not for purchasing a principal residence must be repaid in how many years?
• How is operational risk best defined?
• When trust audits are outsourced to a third party, directors and senior management are relieved of their responsibilities to ensure an effective audit function. Is this statement true or false?
• Commercial paper is typically used for which purpose?
• What are the three components of an audit program?
• A round lot of a stock trade is defined in the securities industry as how many shares?
• Which financial advantage can be attributed to a trust under fiduciary powers?
• What property must a bank take control of when appointed as executor?
• Which of the following is responsible for reviewing administrative policies?
• What type of risk is primarily associated with operational processes or systems?
• How often does the OCC recommend reviewing third-party arrangements for retirement products?
• In a common law state, what is the new cost basis to the beneficiaries for a home valued at $100,000 and a rental property valued at $100,000?
• How effective is a spendthrift clause in a revocable living trust to protect oneself from creditors?
• Which of the following statements about conflicts of interest is true?
• What limitation exists regarding a national bank voting shares of its own stock as trustee?
• Earnings on collateral in a securities lending transaction paid by a lender to a borrower are referred to as:
• If a resident of Illinois dies, which laws apply to her estate distribution when all property is in Illinois except for one account in Indiana?
• What must a bank establish clearly to engage in transactions as a trustee?
• What term is used to describe an agreement where an investment banker purchases an entire issue of securities from a corporation?
• What does an equity security represent?
• In an irrevocable trust account, where should dividends be posted?
• What is the maximum participant loan allowed from qualified plans under ERISA?
• What does effective authentication of customers in electronic financial services primarily aim to mitigate?
• Which of the following is commonly used to finance international trade?
• How should the firm handle discrepancies in client account information?
• What must be determined about participant loans during an audit?
• What is a key supervisory procedure for a FINRA member firm regarding new accounts?
• How frequently must the value of employee securities in an ESOP be determined?
• Which aspect is NOT included in the Concise Summary of Trust Account?
• What is the impact of community property laws on ownership of assets in marriage?
• Treasury bills have all of the following characteristics EXCEPT:
• Which of the following are examples of municipal obligations with maturities of less than one year?
• Which of the following statements about TIPS is true?
• Which property is NOT included in a decedent's gross estate?
• What are the possible consequences for a bank that invests discretionary personal-trust-account assets in its own certificates of deposit with below-market interest rates?
• Why is commercial paper not required to be registered with the SEC?
• What term describes the potential effect of an adverse event on objectives, after the application of controls to mitigate the adverse event?
• The term that refers to making a portfolio "market-like" is?
• Which document outlines the internal audit's authority and responsibility?
• What document outlines the bidding procedures for underwriters for new municipal bonds?
• When either Daniel or Karen dies in a joint-and-survivor annuity, what happens?
• Which of the following is a potential area of operational risk in retirement plan services?
• Regarding FINRA continuing education requirements, who is responsible for the Regulatory Element?
• What measures the sensitivity of an asset's return to movement in the underlying market?
• A stock with a Beta of 1.20 is expected to:
• What is a vital step in the asset allocation process?
• What type of relationship is a custodian considered?
• Which type of investments may be valued annually?
• Which of the following responsibilities does a proxy department NOT have?
• What does it mean if a municipal bond is purchased at $105.00?
• The $19,500 limit in a 401(k) plan relates to all of the following EXCEPT:
• When reviewing employee benefit account transactions, which deposits would not be criticized by a trust auditor?
• The Asset Management rating primarily addresses which fiduciary duty?
• In the absence of specified revocation powers, a trust is assumed to be what?
• Your client purchased 1,000 shares of ABC Corporation on the declaration date and sold 500 shares on the ex-date. He is entitled to receive dividends on how many shares of stock?
• How frequently should securities be marked to market in securities lending?
• Which scenario constitutes a conflict of interest for a bank acting as trustee?
• Which of the following is true regarding the contributions to a Roth IRA compared to a Traditional IRA?
• What is the purpose of a pour-over will?
• What is the cost basis of a stock that Andy bought for $10 and valued at $20 at his death, but worth $25 when distributed?
• How can the alpha coefficient be best defined?
• Which of the following asset data elements is critical to properly control the correct calculation of income payments?
• What best describes an OTC security?
• An investor in a 28% tax bracket needs to receive what taxable return on a corporate bond to equal a 7.2% tax-free yield?
• What is the primary goal of the asset allocation process?
• Which of the following selections describes a benefit of investing in common or collective funds?
• Which type of bond is most likely backed by ad valorem taxes?
• Which of the following asset allocations is considered the least volatile?
• What is synonymous with the "Risk-Free Rate" of return?
• When securities are sold by one investor and purchased by another investor, the transactions occur in which of the following markets?
• Which function is NOT a part of a minimum audit program that an examiner should review?
• What is a fundamental duty of trustees regarding the beneficiaries?
• Under which law was the SEC created?
• What should be the first consideration when making investments in a trust for beneficiaries?
• What is the gross estate amount for a decedent with $400,000 in her name, $150,000 home jointly, and $100,000 life insurance policy?
• How does the Federal Reserve Board influence securities transactions?
• Under the Uniform Transfers to Minors Act, what responsibility does a custodian hold?
• What is one of the specific duties of a fiduciary as dictated by ERISA?
• Which activity is most reliant on the fiduciary compliance/risk management officer?
• What does the 'ex-dividend date' signify for shareholders of a stock?
• If the yield of a bond increases by 1/2%, how many basis points has the yield increased?
• What is the standard of care expected from Corporate Trustees?
• Which of the following is an example of tangible personal property?
• What is the frequency for performing Investment reviews on trust accounts?
• Which of the following money market securities is issued to assist a corporation in managing its cash flow?
• Which statement is NOT a benefit of defining an organization's risk appetite?
• In a QTIP marital deduction trust, the surviving spouse MUST have:
• Which risk measure reflects unexpected performance?
• When making an encroachment for a beneficiary, the trustee should reference which document?
• Which of the following bank customers cannot buy units of a common or collective fund?
• ERISA uses the term "parties in interest" to describe:
• What is the IIA standard timeframe for delivering audit reports after the completion of field work?
• Which provision allows a bond issuer to repay the bond before maturity?
• How do amounts payable to a beneficiary of a Charitable Remainder Annuity Trust generally behave?
• In which plan can an employee elect for their employer to contribute on their behalf or pay an equivalent amount directly to them?
• What responsibilities may an auditor include?
• Which federal law requires the appointment of an independent corporate trust intermediary between borrowers and lenders?
• When obtaining a new client, what is an important item for a broker-dealer firm?
• When a broker-dealer is acting in the capacity of a dealer and buying or selling for its own account, the firm is acting as a(n):
• The yield on a bond can be impacted by what factor?
• Which function is NOT typically handled by the Trust Investment Committee?
• How do beta and standard deviation differ as risk measures?
• What is a distinguishing feature of estate administration compared to personal trust administrations?
• Which factors influence an examiner's assessment of fiduciary risk management processes?
• Which of the following can be used as a measure of a portfolio's performance?
• When can a national bank make a loan to an account using the account's assets as security?
• Service is used as the basis for which of the following in a plan?
• Which regulation is issued pursuant to 12 USC 92(a)?
• A corporation has no earnings in a particular year. The corporation is obligated to pay the interest on all of the following EXCEPT:
• Which of the following are common functions performed by most fiduciary operations departments?
• What action should be taken if participant loans are delinquent and the account administrator is unaware?
• Auditors must ensure that internal balancing and reconciliation controls are performed?
• What does an increase in yield typically indicate about a bond's price?
• In security monitoring, which step provides assurance to an examiner regarding an organization's risk mitigation strategy?
• Certain investment diversification rights apply to a participant in an ESOP:
• Which of the following mortgage backed securities programs is guaranteed by the full faith and credit of the U.S. government?
• In which capacity would a bank be responsible for ensuring that stock certificates are not out of balance?
• The duty to dispose of improper investments requires that a fiduciary dispose of improper assets within?
• Which instruments can be classified as money market instruments?
• What component combines the Account Administration and Conflicts of Interest components in UITRS revisions?
• What is a key regulatory requirement for national banks regarding fiduciary actions?
• How much is includable in Sue's gross estate for purposes of determining the estate tax, after her death?
• Which of the following statements about T-Bills is NOT true?
• Which of the following are published every business day and provide details about market makers in the ITC market?
• When a company is listed on a stock exchange, what is the underwriter's goal regarding the newly listed shares?
• Which of the following statements would you not expect to find in a collective fund plan document?
• How can a bank fiduciary handle business with related agents and brokers?
• If a stockholder fails to subscribe to a rights offering, how is their interest in the company affected?
• A completed gift is made in transferring assets to what type of trust?
• Unallocated stock in an ESOP must be voted:
• Regulation 12 CFR 9.10 indicates that cash can be invested:
• What should be included in a comprehensive review of retirement plan services risk management?
• What describes callable preferred stock?
• How can withdrawals from collective investment funds be made?
• The MAJOR reason the issuers of bonds call provisions is to:
• What was the closing price of MMS Corp bonds on Thursday, January 15th?
• During what part of the securities processing chain does securities lending occur?
• In risk assessment, what aspect is primarily evaluated?
• What is the term for the discount an investment bank receives from the public offering price when buying bonds from a syndicate?
• Which statement about a Eurodollar bond is NOT true?
• Which markets are IPOs related to?
• Which of the following is NOT a characteristic of preferred stock?
• Examiners do not evaluate earnings for institutions with total fiduciary assets of less than $100 million. Is this statement true or false?
• What is a crucial component for an auditor to analyze when addressing a potential issue in the organization?
• What tax-free yield must an individual in the 28% tax bracket receive from a municipal bond to equal a 9% taxable yield on a corporate bond?
• In the event of dissolution, corporate debenture holders rank in relation to general creditors how?
• Under "safe harbor" rules for retirement plans, a hardship withdrawal can be made for which reason?
• Under which act is a prospectus required for a new offering?
• For which of the following markets is a certificate of deposit primarily used?
• What do corporate bonds represent?
• Zero coupon bonds can be issued by all of the following EXCEPT:
• A bond resulting from a corporate action distribution having a par value of less than $1,000 is typically referred to as a:
• What is the maximum civil penalty under Section 502 of ERISA for a fiduciary breach?
• A security with a periodically adjustable interest rate is typically known as a:
• In a 401(k) plan:
• Which statement BEST describes the tax treatment of a lump sum distribution in the form of employer securities?
• What body of laws establishes principles for commercial transactions and property ownership?
• Which of the following activities is typically associated with the operations of a corporate trust administrator?
• What is the regular-way settlement time for municipal securities transactions?
• Which statement about revenue bonds is NOT true?
• Which laws and regulations do trust examiners refer to for compliance assessment?
• What document is used by broker-dealers to advertise bonds in the secondary market?
• Which powers are commonly granted to trustees?
• Which of the following is NOT a primary duty of a fiduciary in managing assets?
• What is a fiduciary institution's primary duty?
• Who decides whether plan expenses will be paid from plan assets?
• Which type of trust is immediately effective upon execution?
• A preferred stock which must make up dividends in arrears is called what?
• What common misconception about operational risk does ERM aim to address?
• What factor is NOT considered to increase compliance risk in Retirement Services?
• Which of the following types of securities are not traditionally lent?
• Which of the following is NOT required in an audit report according to IIA standards?
• If six directors are to be elected under statutory voting, a stockholder owning 100 shares of stock could cast:
• When must distributions from a qualified plan begin according to regulations?
• What is the typical maturity period for a bankers' acceptance?
• A corporation will primarily split its stock to:
• What would likely happen to the price of your convertible bond if the underlying stock declines?
• Which department in a broker-dealer firm is responsible for acting as a liaison between issuing organizations and customers?
• Which statements are considered effective ways to manage potential conflicts of interest?
• An unmarried client dies intestate with $400,000 in her name and $100,000 in joint tenancy with one of four children. How will the assets be divided?
• What results from the merger of NASD and the regulatory part of NYSE?
• What is the standard settlement period for regular way transactions?
• Which areas are primary determinants of the Compliance rating?
• The Trust Indenture Act does NOT apply to which type of indenture?
• What kind of policy does the Trust Investment Committee establish?
• Which of the following statements about the characteristics of Treasury bills is correct?
• How are corporate fiduciaries held accountable in terms of fiduciary liability?
• Level 1 of NASDAQ displays what information?
• Which bond's price would be most affected by a yield increase of 20 basis points?
• Which function is NOT a primary compliance function?
• Jean and John Simmons own their home as tenants by the entirety. How much will be counted in John's gross taxable estate upon his death?
• What must issuers provide to qualify for an exemption under Regulation D?
• In personal fiduciary accounts, who is typically entitled to the principal?
• In a profit sharing plan allowing participants to invest their balances, how must earnings and contributions be allocated?
• How are death benefits from a life insurance policy, where the decedent held incidents of ownership, regarded for tax purposes?
• The factor that distinguishes trust accounting from general accounting is:
• The standard deviation can best be described as?
• What final authority determines permitted investments in a trust indenture?
• Which requirement must qualified plans fulfill regarding communication?
• What is the OCC's stance on lending trust funds for a mortgage loan linked to a previous construction loan?
• Which of the following services might typically be provided to 401(k) plan participants by a large bank?
• Which metric indicates the total return of an investment above a benchmark?
• What word describes the process by which a corporate trustee certifies that securities have been validly issued according to the terms of an indenture?
• What constitutes a fraudulent act within the meaning of section 206(4) of the Adviser Act regarding voting authority with respect to client securities?
• Which of the following types of bankruptcies allows corporate creditors and debtors to remain flexible while working together?
• According to OCC guidelines, how should banks approach risk management in third-party relationships?
• Which bond has a closing market price equal to its par value based on the quoted bond prices?
• In trust accounts, what is the collateral requirement when cash is deposited above FDIC limits?
• Interest on fixed-rate municipal bonds typically uses what day count convention?
• What should the analysis of audit findings include?
• What is the fundamental principle behind trust accounting?
• What might be a consequence of failing to provide adequate participant education in retirement plans?
• If a preferred stockholder receives a larger dividend than stated, what type of stock is likely held?
• If ABC Corporation common stock has a beta of 1.75, what can be inferred about its volatility relative to the market?
• A U.S. Government bond is selling in the market at 97.08. The dollar value of this bond is:
• A bond selling at a premium:
• Which of the following is a characteristic of a revocable living trust?
• What do short-term government securities typically offer investors?
• The diversifying effect of combining two assets in a portfolio is measured by what?
• What is the impact of adding small portions of international equities into a portfolio?
• Which of the following is one kind of collateral given to secure a securities loan?
• What is necessary for an investment adviser to comply with advertising regulations?
• In a firm commitment underwriting agreement, what responsibility does the underwriter have?
• What is the typical margin requirement on domestic security loans?
• Under ERISA 404(c) provisions, which statement about participant control is CORRECT?
• What is considered one of the only corporate trust relationships administered by a bank trust department?
• Which type of financial instrument is primarily used for short-term funding needs?
• According to the FFIEC policy statement on securities lending, what is the minimum initial amount of collateral required on domestic security loans?
• Regulation U governs:
• A purchaser of zero-coupon corporate bonds would NOT be exposed to which of the following risks?
• True or False: In small trust institutions, staff personnel must specialize in areas of investment management, accounts administration, and operations.
• What is a caveat in the context of probate court?
• According to Rule 144, what is the maximum number of shares Mr. Brown could sell given the trading volume history provided?
• Which of the following is not classified as a municipal bond?
• What does it mean if a person dies intestate?
• Which type of preferred stock allows the issuer to reclaim the shares?
• Which of the following best describes the primary role of a financial institution regarding fraud?
• Which type of municipal bond typically requires a feasibility study to assess the issuer's ability to pay interest?
• What is the primary responsibility of a Bank Trust Department acting as executor of an estate?
• When lending government securities, market practice requires collateral equal to what percentage of the loaned security market value to be posted?
• Junk bonds:
• If an income payment date falls on a month-end weekend, when does the Federal Reserve pay custodians?
• What is the primary purpose of the SEC's Regulation D?
• The provision where beneficiaries must withdraw funds within 30 days after being notified is known as what?
• The primary focus of internal audit is to determine what aspects of an organization?
• Which of the following is not a general power of appointment?
• What is the maximum maturity for a Treasury bill?
• What does a trust organization NOT typically do in its fiduciary role?
• Generally speaking, a conflict of interest can arise in any situation where a fiduciary puts its own interest before the interests of the account. Is this statement true or false?
• Which entity handles the issue of a corporate bond?
• Which method is not used by the SEC to clarify its expectations under the Investment Advisers Act of 1940?
• How often is a new Treasury bill auction conducted?
• What can cause bonds to trade at a discount?
• What financial instrument can indicate interest rate trends?
• Which of the following types of securities are NOT lendable?
• What is a potential benefit of using a common trust fund for investors?
• If a bond's yield-to-maturity equals its nominal yield, what is the bond's price?
• What must an auditor confirm regarding loans made to officers of the trustee bank, as instructed by a trust instrument?
• Which is a key responsibility of compliance programs in investment advisory firms?
• Which of the following is a key duty of a fiduciary?
• What is a typical requirement for a profit-sharing plan?
• Which of the following entities issues STRIPS as a type of security?
• What is a key feature of convertible bonds?
• Which of the following types of stock guarantees a dividend even when the issuing corporation does not earn a profit?
• Which of the following statements about over-the-counter market makers is NOT true?
• What is a key advantage of a charitable remainder uni-trust (CRUT)?
• When is a conflict of interest declared in trust transactions between a bank and the trust?
• A contractual trade settlement policy means the:
• Which body was established to protect investors in the securities industry?
• What is the main purpose of the unified credit in estate planning?
• A private placement may be sold to a maximum of how many non-accredited investors?
• What is one responsibility that the Trust Administrative Committee does NOT have?
• Which party is entitled to the dividend on a loaned stock position?
• Which of the following conditions is essential for a bank fiduciary's self-dealing?
• What is permissible regarding cash held in trust by a national bank?
• What must a national bank establish regarding collateral securities when holding cash in trust?
• What is a fiduciary's obligation regarding the management of conflict of interest situations?
• An ADR facilitates which of the following?
• Which of the following is a key characteristic of common stock?
• How many shares of ABC Corporation is Mrs. Verona entitled to receive dividends for after her transactions?
• Which of the following is the document provided to shareholders that entitles them to elect directors?
• Is it true that a bank can act as both a corporate trustee and a commercial lender to the same corporation?
• Which situation would NOT typically trigger a conflict of interest concern for a fiduciary?
• Under what circumstance can the trustee deviate from maintaining an impartial duty to beneficiaries?
• Which of the following is an example of unsystematic risk?
• Which of the following controls would likely be used in conjunction with trust assets held in the vault?
• If a bank employee notices suspicious activity in a dormant account, who should they contact?
• Collective investment funds must be audited to meet which requirement?
• Which type of preferred stock permits the owner to exchange it for common stock?
• What should a compliance officer determine during a review of charge-offs and losses?
• Which of the following is the form that permits a shareholder to exercise the voting rights of his shares?
• What percentage of a benefits payment eligible for rollover must a trustee withhold for federal tax?
• Which of the following investment types is usually considered the safest option?
• Which institutions must report fiduciary settlements, surcharges, losses, and recoveries?
• Which action is a caveat in relation to a will?
• What is the required time frame for completing a rollover from a qualified plan to another qualified plan or an IRA to avoid taxation?
• How often must access persons report their personal securities transactions?
• A movie star buys a vacation property in your town and chooses you to act as trustee of her revocable living trust. What should you do?
• Under what condition can an irrevocable trust be terminated before the normal distribution date?
• Which type of securities activity has the highest operational risk?
• Which regulatory agency can relieve a fiduciary from a breach of fiduciary duty regarding Employee Benefit Plans?
• What term describes bonds that are issued in foreign currencies by a foreign entity in U.S. markets?
• Which governmental body primarily regulates credit for margin securities extended by broker-dealers?
• What is a fiduciary appointed by the court for an estate referred to as?
• MIG ratings are typically assigned to which type of bonds?
• Common stock is sold in the secondary market in round lots of how many shares?
• Which statement about brokered certificates of deposit is NOT true?
• Which of the following book-entry securities results from the separation of the interest and principal portions of marketable U.S. Treasury securities?
• What aspect should advisers focus on to improve client relationships, according to compliance best practices?
• When cash from trust accounts is deposited in a bank, collateral must be set aside for what situation?
• What represents the fair market value of a stock at distribution for tax purposes?
• Common stock dividends are declared by which of the following corporate actions?
• Which financial instrument must protect dividends specifically?
• Which of the following is NOT a revision included in the UITRS?
• Securities traded in the over-the-counter market include all of the following EXCEPT:
• What type of auditors is required for collective investment funds according to regulations?