CTFA Practice Questions - Certified Trust and Fiduciary Advisor (CTFA) Exam - CTFA Practice Questions - Certified Trust and Fiduciary Advisor (CTFA) Exam

Question 1

A trustee is reviewing a portfolio that holds equities, bonds, and cash. Under the prudent investor rule, how should prudence usually be evaluated?

By comparing each holding to the trustee's personal account By judging each security only on its most recent quarterly return By looking at the portfolio as a whole in light of the trust's purposes, terms, and risk-return objectives By requiring every asset class to produce the same income yield

Correct Answer:

By looking at the portfolio as a whole in light of the trust's purposes, terms, and risk-return objectives

Question 2

A trust instrument directs the trustee to retain a large block of employer stock, but concentration risk has become material. What is the BEST first step for the fiduciary?

Sell the position immediately without reviewing the instrument Document the risk, review the retention language and applicable law, and seek counsel or court guidance if authority is unclear Transfer the stock to the beneficiaries without a receipt or release Ignore the issue because settlor-selected assets can never be questioned

Correct Answer:

Document the risk, review the retention language and applicable law, and seek counsel or court guidance if authority is unclear

Question 3

Which fiduciary duty requires trust property to be kept separate from the trustee's own assets?

The duty to earmark and segregate fiduciary assets The duty to maximize current income The duty to obtain beneficiary consent before every trade The duty to avoid all delegation

Correct Answer:

The duty to earmark and segregate fiduciary assets

Question 4

When may a trustee reasonably hold an undiversified position without automatically violating fiduciary standards?

Whenever the trustee has a strong personal belief in the company Only when every beneficiary gives oral consent When trust terms or special circumstances justify retention and the fiduciary documents why the strategy still serves the beneficiaries Never, because diversification has no exceptions

Correct Answer:

When trust terms or special circumstances justify retention and the fiduciary documents why the strategy still serves the beneficiaries

Question 5

A bank serves as directed trustee while an outside adviser has exclusive authority over investments. Which statement BEST describes the bank's role?

The bank automatically becomes the primary investment adviser The bank has no fiduciary duties once investment authority is directed elsewhere The bank may rewrite the trust if it disagrees with the direction holder The bank generally follows authorized directions on investments but still must perform its assigned administrative duties and act within governing law

Correct Answer:

The bank generally follows authorized directions on investments but still must perform its assigned administrative duties and act within governing law

Question 1

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About this Exam

Prepare with the CTFA Practice Questions - Certified Trust and Fiduciary Advisor (CTFA) Exam practice quiz. This question bank includes 100 questions covering trust, fiduciary, trustee, beneficiary, and income. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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CTFA Practice Questions - Certified Trust and Fiduciary Advisor (CTFA) Exam

This practice set contains 100 questions from the matching question bank and focuses on trust, fiduciary, trustee, beneficiary, and income. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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CTFA Practice Questions - Certified Trust and Fiduciary Advisor (CTFA) Exam

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