Test your basic knowledge |

Wealth Management Exam

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. 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






2. Income (dividends - interest - rents) - capital gain/ loss in value






3. 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






4. 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






5. Brokerages - insurance companies






6. Used to minimize issuer specific risks - principle of holding more than one risk at a time






7. You would have missed 96% of market's gains






8. 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






9. Selling loses so you avoid capital gain taxes






10. Private banks - mutual funds - hedge funds - trust companies - brokerages






11. Monitoring performance and adherence to policy - reviewing IPS on regular basis






12. Don't want stocks highly correlated if trying to diversify






13. 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






14. Appropriate credit quality and interest rate risk - no individual corporate issuer more than 5%






15. Probability theory






16. Income and capital gain/loss in value - income is passed through to shareholders - gain/loss occurs on the mutual funds shares as well as on the underlying fund portfolio - fund portfolio gains are passed to shareholders; losses are retained in the f






17. Strategy of reducing idiosyncratic risks by making two investments with opposing risks






18. Paid for U.S. corp or qualified foreign corp - taxed at 15% for those in tax bracket of 25% or more - taxed at 0% for those in tax bracket less than 25% - holding period requirement






19. Investment banks - financial consultants






20. Culture/philosophy - money - risk/reward - career trajectory - other support roles






21. Bonds: coupon income + changes in price due to changes in interest rates - stocks: dividend yield + growth in earnings + change in p/e






22. Reduce risk and can increase returns






23. Who wants significant input on investment selections or who has very few transactions and very little change in circumstances






24. Paid for U.S. corp or qualified foreign corp - taxed at 15% for those in tax bracket of 25% or more - taxed at 0% for those in tax bracket less than 25% - holding period requirement






25. Private banks - mutual funds - retail brokerages - hedge/private equity funds






26. Take account of the bank's strategy - product - recommendations - ideas and investment themes - apply allocation rules - investment proposal






27. 3 yrs qualified work experience - complete cfp courses and exams - financial planning - employee benefits planning - investment planning - risk management - retirement planning






28. Sum of probabilities - probability weighted sum of the possible outcomes






29. High ethical standards - communication skills - quantitative and analytical skills - attention to detail - work independently - current events - financial matters - client interests






30. Never - monthly - quarterly - if more than 5% from target at month's end - if more than 5% from target at quarter's end






31. You would have missed 96% of market's gains






32. 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






33. Investment banks - financial consultants






34. Assets are comparable - style - type of securites - value and growth






35. Determines broad portfolio composition across asset classes - allocation between stock - bond - and cash determined more than 90% of the variability of returns






36. Determines broad portfolio composition across asset classes - allocation between stock - bond - and cash determined more than 90% of the variability of returns






37. Bringing portfolio back to our allocation policy when market forces or life events changed the mix






38. 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






39. 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






40. High income upside potential - low base salary - greater requirement to sell in many cases - including cold call - cutting edge investment thinking - products - and support - SEC licensing required - potential long term commitment required






41. Restricted and unrestricted funds - characteristics and constraints






42. Amount of money you have paid into the house






43. In a fee based environment - base salary typically has a sig. variable component in the form of commissions or bonuses - variable compensation determined by quantitative and qualitative factors - similar to fee arrangement for client






44. Private banks - mutual funds - retail brokerages - hedge/private equity funds






45. Paid per transaction for your idea






46. Income and capital gain/loss in value - income is passed through to shareholders - gain/loss occurs on the mutual funds shares as well as on the underlying fund portfolio - fund portfolio gains are passed to shareholders; losses are retained in the f






47. Target: a proportion for allocation under 'normal' circumstances - range: an allowable band for allocation under variable circumstances






48. Define investor profile and liquidity needs over time - identify the proportion of each section in line with your risk profile - investor profile - asset allocation






49. Increases risk and reduces sharpe (return/risk) ratios






50. Risk by keeping investor with pre-determined risk profile