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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. Commission - fee - salary - hourly fee for service






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






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






4. 4 yrs qualified investment work experience - completion of cfa program - 3 6hr exams - 2-5 yrs to complete






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






6. 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






7. Commission - fee - salary - hourly fee for service






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






9. The theoretical rate of return of an investment with no risk of financial loss - i.e. short dated domestic govt bond (default benchmark)






10. Broker/dealer- FINRA - SEC - bank exemption- fed and state regulators - employers - industry associations






11. Probability X squared deviation of payoff from expected value






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






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






14. 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






15. Restricted and unrestricted funds - characteristics and constraints






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






17. 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






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






19. 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






20. Priority of income - growth - safety of principal - benchmarks






21. Asset allocation and diversification






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






23. Sell assets with losses and offset with sales of those with gains - rebalance in tax advantaged accounts (IRA or 401K)






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






25. 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






26. 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






27. Payoff-expected value






28. 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






29. 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






30. Economy wide risks - consumer spending - economy






31. 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






32. Execution at 18 mo intervals provides most of the benefits with less costs






33. Amount of money you have paid into the house






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. Accumulate wealth over time by spending less than they earn - invest 20% of income per year - incomes are about average - advanced degrees






36. 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






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






38. Selling loses so you avoid capital gain taxes






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






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






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






42. 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






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






44. Probability theory






45. 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






46. Review at least annually to manage gains/losses - clients adding or taking distributions require more frequent monitoring






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






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






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






50. Inherited wealth - suddenly wealthy - endowments and foundations