Cannon Financial Institute CFIRS Practice Exam

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