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Test your basic knowledge |
Wealth Management Exam
Start Test
Study First
Subjects
:
personal-finance
,
business-skills
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Culture/philosophy - money - risk/reward - career trajectory - other support roles
how to choose where to work
where do wealthy clients get their money?
offer wealth management services
best client suited for fee based
2. High ethical standards - communication skills - quantitative and analytical skills - attention to detail - work independently - current events - financial matters - client interests
how 15-20 stocks create diversified portfolio
uniform prudent investor act
qualified dividends
who is suited for wealth management career
3. Paid as percentage of assets under management for your advice
fee
calculating expected return
how 15-20 stocks create diversified portfolio
morningstar study about rebalancing
4. Commission - fee - salary - hourly fee for service
where do wealthy clients get their money?
4 ways of getting paid
purpose of the funds to be invested
what diversification can do
5. Measure of uncertainty about the future payoff to an investment measured over some time horizon and relative to a benchmark
measuring risk
who else will you serve?
needs step of wealth management
risk
6. Brokerages - insurance companies
needs step of wealth management
hourly
use commissions model
how 15-20 stocks create diversified portfolio
7. Reduce risk and can increase returns
how to choose where to work
How many issues needed to create a diversified stock portfolio?
diversification
what diversification can do
8. Reduce risk and can increase returns
idiosyncratic risk
what diversification can do
rebalancing
needs step of wealth management
9. 1. define your needs and objectives 2. develop investment sections 3. regularly monitor your portfolio 4. validation
steps of wealth management
offer wealth management services
Value at Risk (VaR)
how to protect client from unjustified risks?
10. Increases risk and reduces sharpe (return/risk) ratios
working at large national bank
working at brokerage
use commissions model
what happens if you never rebalance
11. Private banker - financial advisor - insurance agent - research analyst - portfolio manager - mutual fund manager/ marketer - hedge fun manager - family office - fund of funds manager - private equity manager/ analyst - financial consultant
how to choose where to work
wealth management positions
validation step of wealth management
needs step of wealth management
12. Bonds: coupon income + changes in price due to changes in interest rates - stocks: dividend yield + growth in earnings + change in p/e
steps of wealth management
offer wealth management services
drivers of return
how time impacts risk
13. Rebalance tax deferred accts first to reduce tax consequences - use tax loss harvesting in your taxable accounts prior to dec. 31 - try taking gains in taxable acct after 12/31 - when taking distributions - sell from overweight classes first - when a
how to choose where to work
rebalancing recommendations
idiosyncratic risk
needs step of wealth management
14. Broker/dealer- FINRA - SEC - bank exemption- fed and state regulators - employers - industry associations
uniform prudent investor act
develop investment sections step of wealth management
investment policy statement
who governs these services
15. Used to minimize issuer specific risks - principle of holding more than one risk at a time
salary
monitor step of wealth management
diversification
how 15-20 stocks create diversified portfolio
16. Asset allocation and diversification
idiosyncratic risk
timing of rebalancing
who else will you serve?
how to protect client from unjustified risks?
17. Check compliance with concentration rules and diversification in the portfolio - validate the proposal or develop a new asset allocation - revision
wealth management recommendation about rebalancing
validation step of wealth management
what happens if you never rebalance
hedging risk
18. Payoff-expected value
measuring risk
working at brokerage
rebalancing
deviation of payoff from expected value
19. Take account of the bank's strategy - product - recommendations - ideas and investment themes - apply allocation rules - investment proposal
timing of rebalancing
chartered financial analyst
monitor step of wealth management
develop investment sections step of wealth management
20. Determines broad portfolio composition across asset classes - allocation between stock - bond - and cash determined more than 90% of the variability of returns
asset allocation
what to ask if client has inappropriate allocation
who is best suited for hourly wealth management
wealth management positions
21. You would have missed 96% of market's gains
investment policy statement
working at community bank
what would happen if you were out of the stock market during the 90 best days
where do wealthy clients get their money?
22. Understand incentives of journalists - analysts - and companies in trying to make you take action - stay in the market - continue to add to your portfolio - buy and hold works
develop investment sections step of wealth management
market timing
morningstar study about rebalancing
what does rebalancing force?
23. Assumption of trustee for assets - standard of prudence applied to whole portfolio rather than individual asset - tradeoff between risk and return - trustee can invest in anything that plays an appropriate role in risk/return profile - diversificati
steps of wealth management
uniform prudent investor act
VaR of stocks and bonds
who else will you serve?
24. Unique risks
how to protect client from unjustified risks?
who is suited for wealth management career
idiosyncratic risk
what makes a good benchmark
25. Define investor profile and liquidity needs over time - identify the proportion of each section in line with your risk profile - investor profile - asset allocation
needs step of wealth management
how to protect client from unjustified risks?
Value at Risk (VaR)
who use salary based model
26. Precise and regular review of each investment section - risk management/ volatility check - arbitration proposals - continuous control
use commissions model
monitor step of wealth management
hedging risk
VaR of bank's mortgage backed securities
27. Risk by keeping investor with pre-determined risk profile
what does rebalancing control?
wealth management positions
diversification
how 15-20 stocks create diversified portfolio
28. Strategy of reducing idiosyncratic risk by making two investments whose payoffs are unrelated
needs step of wealth management
offer wealth management services
spreading risk
what happens if you never rebalance
29. Square root of variance/initial investment
what diversification can do
idiosyncratic risk
how to computer std. dev
working at brokerage
30. Economy wide risks - consumer spending - economy
iowa trust code requires the trustee to consider
spreading risk
systematic risk
deviation of payoff from expected value
31. More stability - higher salary - less upside potential for income - may need fiduciary skill - more focus on client service - less on asset gathering - sec licensing likely not required - call primarily on bank customers
How many issues needed to create a diversified stock portfolio?
who use salary based model
two rates that returns are taxed by
working at community bank
32. Brokerages - investment banks - commercial banks - trust departments - large comprehensive accounting firms - independent financial planners - insurance companies
risk-free investment
VaR of bank's mortgage backed securities
market timing
offer wealth management services
33. Risk by keeping investor with pre-determined risk profile
who use hourly
tax loss harvesting
what does rebalancing control?
rebalancing recommendations
34. Square root of variance/initial investment
what would happen if you were out of the stock market during the 90 best days
use commissions model
how to computer std. dev
who is suited for wealth management career
35. Commission - fee - salary - hourly fee for service
who else will you serve?
hourly
4 ways of getting paid
fee
36. Ordinary income tax rate (high - up to 35%) - capital gains rate (low - 0% or 15%)
two rates that returns are taxed by
sources of taxable return
diversifying bonds
wealth management recommendation about rebalancing
37. The longer the time with payments the more the risk - fixed income (bonds) the more time the more risk - stocks: the longer the time less volatility
steps of wealth management
morningstar study about rebalancing
what makes a good benchmark
how time impacts risk
38. Buy low and sell high
iowa trust code requires the trustee to consider
idiosyncratic risk
what does rebalancing force?
risk
39. Majority of diversification benefit is reached with a portfolio of as few as 15-20 stocks => no more than 5% of stock portfolio in any one company - depends on definition of market
chartered financial analyst
how 15-20 stocks create diversified portfolio
How many issues needed to create a diversified stock portfolio?
who use hourly
40. Strategy of reducing idiosyncratic risks by making two investments with opposing risks
hedging risk
steps of wealth management
who is best suited for hourly wealth management
4 ways of getting paid
41. Fees or expenses - tax consequences
rebalancing recommendations
systematic risk
reasons to retain certain assets
best client suited for commission based
42. Payoff X probability - payoff is the potential return of the investment
how 15-20 stocks create diversified portfolio
monitor step of wealth management
probability theory
market timing
43. Get paid on hourly basis for advice
rebalancing recommendations
VaR of stocks and bonds
diversifying stocks
hourly
44. Paid per transaction for your idea
commission
What risk measurement is based on
morningstar study about rebalancing
salary
45. Investment banks - financial consultants
who is best suited for hourly wealth management
morningstar study about rebalancing
who is best suited for hourly wealth management
who use hourly
46. Brokerages - insurance companies
what makes a good benchmark
use commissions model
spreading risk
who is best suited for hourly wealth management
47. Focus on integrated services/ cross selling - may be less pressure to sell than brokerage but more than community bank - blurring lines between brokerage and trust areas
VaR of adjustable rate mortgage?
diversifying stocks
working at large national bank
diversification
48. The longer the time with payments the more the risk - fixed income (bonds) the more time the more risk - stocks: the longer the time less volatility
qualified dividends
why correlation matters
how time impacts risk
expected value of probability theory
49. Restricted and unrestricted funds - characteristics and constraints
diversifying stocks
purpose of the funds to be invested
how to rebalance for no tax cost?
VaR of bank's mortgage backed securities
50. Payoff-expected value
two rates that returns are taxed by
who else will you serve?
deviation of payoff from expected value
who use salary based model