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






2. Check compliance with concentration rules and diversification in the portfolio - validate the proposal or develop a new asset allocation - revision






3. Representation in domestic and international - large - mid - small cap - no individual stock more than 5% of total portfolio






4. Restricted and unrestricted funds - characteristics and constraints






5. 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)






6. Get paid on hourly basis for advice






7. Unique risks






8. Reduce risk and can increase returns






9. 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






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






11. Fees or expenses - tax consequences






12. 1. define your needs and objectives 2. develop investment sections 3. regularly monitor your portfolio 4. validation






13. Ordinary income tax rate (high - up to 35%) - capital gains rate (low - 0% or 15%)






14. Probability X squared deviation of payoff from expected value






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






16. Invest some fixed amount of money at regular intervals - allows to buy more shares when prices are low - not market timing doesn't work - reduces down side risk of putting lump sum in prior to a drop in value






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






18. How far does it stray? - do other client characteristics justify the variance? what changes need to be made to correct? - how long? - - cost in taxes and transaction costs? - worth it to reallocate?






19. Strategy of reducing idiosyncratic risk by making two investments whose payoffs are unrelated






20. Precise and regular review of each investment section - risk management/ volatility check - arbitration proposals - continuous control






21. Selling loses so you avoid capital gain taxes






22. Representation in domestic and international - large - mid - small cap - no individual stock more than 5% of total portfolio






23. Paid as percentage of assets under management for your advice






24. 3 yrs qualified work experience - complete cfp courses and exams - financial planning - employee benefits planning - investment planning - risk management - retirement planning






25. 1. define your needs and objectives 2. develop investment sections 3. regularly monitor your portfolio 4. validation






26. 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






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






28. Square root of variance/initial investment






29. 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






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






31. Buy low and sell high






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






33. Brokerages - investment banks - commercial banks - trust departments - large comprehensive accounting firms - independent financial planners - insurance companies






34. 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)






35. Brokerages - insurance companies






36. 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






37. Inherited wealth - suddenly wealthy - endowments and foundations






38. 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






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






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






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






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






43. Inherited wealth - suddenly wealthy - endowments and foundations






44. Measure of uncertainty about the future payoff to an investment measured over some time horizon and relative to a benchmark






45. Investment banks - financial consultants






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






47. 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






48. 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






49. Precise and regular review of each investment section - risk management/ volatility check - arbitration proposals - continuous control






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