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Wealth Management Exam

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. If stocks are chosen carefully to create lowest possible correlation of returns - if those stocks are monitored carefully to assure that they will continue to have uncorrelated returns
who is best suited for hourly wealth management
two rates that returns are taxed by
how time impacts risk
how 15-20 stocks create diversified portfolio

2. Monitoring performance and adherence to policy - reviewing IPS on regular basis
develop investment sections step of wealth management
validation step of wealth management
how to compute variance
responsibilities of the client

3. Commission - fee - salary - hourly fee for service
What risk measurement is based on
who use hourly
4 ways of getting paid
probability theory

4. Purpose of the funds to be invested - investment objectives - responsibilities of the investment manager - responsibilities of the client - set allocation policy based on targets or ranges
investment policy statement
what makes a good benchmark
VaR of bank's mortgage backed securities
who is suited for wealth management career

5. Private banks - mutual funds - hedge funds - trust companies - brokerages
idiosyncratic risk
use fee based model
how time impacts risk
systematic risk

6. Commission - fee - salary - hourly fee for service
4 ways of getting paid
what diversification can do
calculating expected return
deviation of payoff from expected value

7. Who wants objective advice - does not need ongoing attention - or who just wants a second opinion on what they are doing with no strings attached
who is best suited for hourly wealth management
steps of wealth management
wealth management positions
how to compute variance

8. Measure of uncertainty about the future payoff to an investment measured over some time horizon and relative to a benchmark
How many issues needed to create a diversified stock portfolio?
risk
use fee based model
diversification

9. Selling loses so you avoid capital gain taxes
working at community bank
morningstar study about rebalancing
tax loss harvesting
steps of wealth management

10. 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
tax loss harvesting
rebalancing recommendations
use commissions model
how time impacts risk

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
reasons to retain certain assets
sources of taxable return
wealth management positions
two rates that returns are taxed by

12. Strategy of reducing idiosyncratic risk by making two investments whose payoffs are unrelated
how to compute variance
VaR of stocks and bonds
how to rebalance for no tax cost?
spreading risk

13. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. prospective purchasers should much prefer sinking prices
market timing
what Warren Buffet says about diversifying over time with $ cost averaging
spreading risk
timing of rebalancing

14. St. dev. - correlation or R2 - VaR- value at risk
what return includes for mutual funds
validation step of wealth management
measuring risk
iowa trust code requires the trustee to consider

15. Get paid on hourly basis for advice
hourly
spreading risk
iowa trust code requires the trustee to consider
working at large national bank

16. Who wants ongoing service over financial affairs; should align interests insofar as the wealth management professional wants to see the portfolio grow as much as the client
best client suited for fee based
calculating expected return
diversifying bonds
what does rebalancing force?

17. Risk by keeping investor with pre-determined risk profile
expected value of probability theory
What risk measurement is based on
how 15-20 stockswill not diversify portfolio
what does rebalancing control?

18. Bonds: coupon income + changes in price due to changes in interest rates - stocks: dividend yield + growth in earnings + change in p/e
how 15-20 stockswill not diversify portfolio
drivers of return
investment policy statement
timing of rebalancing

19. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. prospective purchasers should much prefer sinking prices
responsibilities of the client
idiosyncratic risk
VaR of adjustable rate mortgage?
what Warren Buffet says about diversifying over time with $ cost averaging

20. St. dev. - correlation or R2 - VaR- value at risk
measuring risk
drivers of return
what Warren Buffet says about diversifying over time with $ cost averaging
commission

21. General economic conditions - tax consequences of change - role of asset w/ in total portfolio - total return including income and principal - other resources - need for liquidity - income - preservation or appreciation of principal
what Warren Buffet says about diversifying over time with $ cost averaging
measuring risk
where do wealthy clients get their money?
iowa trust code requires the trustee to consider

22. Buy low and sell high
commission
what does rebalancing force?
how to choose where to work
rebalancing

23. Probability theory
What risk measurement is based on
what does rebalancing force?
risk
validation step of wealth management

24. Culture/philosophy - money - risk/reward - career trajectory - other support roles
use fee based model
use fee based model
qualified dividends
how to choose where to work

25. Accumulate wealth over time by spending less than they earn - invest 20% of income per year - incomes are about average - advanced degrees
diversifying stocks
working at brokerage
market timing
where do wealthy clients get their money?

26. Value of the worst possible outcome - measures maximum potential loss - over a specific time horizon - at a given probability - used widely in the management and regulation of financial institutions
working at large national bank
salary
Value at Risk (VaR)
4 ways of getting paid

27. Private banks - mutual funds - retail brokerages - hedge/private equity funds
who use salary based model
iowa trust code requires the trustee to consider
purpose of the funds to be invested
use fee based model

28. Weighted average of the expected returns of its components
wealth management recommendation about rebalancing
calculating expected return
diversifying bonds
diversification

29. Amount of money you have paid into the house
where do wealthy clients get their money?
rebalancing recommendations
what does rebalancing force?
VaR of adjustable rate mortgage?

30. Private banks - mutual funds - hedge funds - trust companies - brokerages
how to protect client from unjustified risks?
drivers of return
what happens if you never rebalance
use fee based model

31. Buy low and sell high
what does rebalancing force?
iowa trust code requires the trustee to consider
VaR of bank's mortgage backed securities
probability theory

32. Increases risk and reduces sharpe (return/risk) ratios
needs step of wealth management
how to compute variance
what happens if you never rebalance
asset allocation

33. Appropriate credit quality and interest rate risk - no individual corporate issuer more than 5%
deviation of payoff from expected value
wealth management positions
what return includes for mutual funds
diversifying bonds

34. Increases risk and reduces sharpe (return/risk) ratios
steps of wealth management
what happens if you never rebalance
diversifying stocks
how to diversify

35. Purpose of the funds to be invested - investment objectives - responsibilities of the investment manager - responsibilities of the client - set allocation policy based on targets or ranges
hourly
two rates that returns are taxed by
investment policy statement
what would happen if you were out of the stock market during the 90 best days

36. High ethical standards - communication skills - quantitative and analytical skills - attention to detail - work independently - current events - financial matters - client interests
two rates that returns are taxed by
how to protect client from unjustified risks?
who is suited for wealth management career
what makes a good benchmark

37. Asset allocation and diversification
deviation of payoff from expected value
who use salary based model
develop investment sections step of wealth management
how to protect client from unjustified risks?

38. Recovery rate (how much get back if default)

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39. Restricted and unrestricted funds - characteristics and constraints
VaR of bank's mortgage backed securities
where do wealthy clients get their money?
purpose of the funds to be invested
responsibilities of the client

40. Value of the worst possible outcome - measures maximum potential loss - over a specific time horizon - at a given probability - used widely in the management and regulation of financial institutions
What risk measurement is based on
Value at Risk (VaR)
use commissions model
offer wealth management services

41. 1. define your needs and objectives 2. develop investment sections 3. regularly monitor your portfolio 4. validation
what return includes for mutual funds
diversifying bonds
steps of wealth management
iowa trust code requires the trustee to consider

42. 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
expected value of probability theory
market timing
rebalancing recommendations
risk

43. 3 yrs qualified work experience - complete cfp courses and exams - financial planning - employee benefits planning - investment planning - risk management - retirement planning
certified financial planner
chartered financial analyst
what happens if you never rebalance
investment policy statement

44. Client is unwilling to make appropriate trades due to tax impact or sentimental attachment - wealth management is unable to determine correlations between stocks - trading them through time (actively managing account)
rebalancing
diversifying stocks
drivers of return
how 15-20 stockswill not diversify portfolio

45. Review at least annually to manage gains/losses - clients adding or taking distributions require more frequent monitoring
wealth management recommendation about rebalancing
tax loss harvesting
asset allocation
what Warren Buffet says about diversifying over time with $ cost averaging

46. Assets are comparable - style - type of securites - value and growth
use commissions model
risk
What risk measurement is based on
what makes a good benchmark

47. Payoff X probability - payoff is the potential return of the investment
investment objectives
probability theory
use commissions model
what makes a good benchmark

48. Target: a proportion for allocation under 'normal' circumstances - range: an allowable band for allocation under variable circumstances
purpose of the funds to be invested
risk
working at community bank
setting allocation policy based on targets and ranges

49. Income (dividends - interest - rents) - capital gain/ loss in value
hedging risk
chartered financial analyst
VaR of stocks and bonds
sources of taxable return

50. Across and within asset classes - internationally as well as domestically - find investments with low correlation R2 - asset correlation changes over time - for stocks diversify across and within sectors - diversify over time with dollar cost averagi
rebalancing
probability theory
how to diversify
who use hourly