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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. Check compliance with concentration rules and diversification in the portfolio - validate the proposal or develop a new asset allocation - revision
validation step of wealth management
VaR of stocks and bonds
develop investment sections step of wealth management
responsibilities of the client
2. Buy low and sell high
who is best suited for hourly wealth management
hedging risk
salary
what does rebalancing force?
3. Increases risk and reduces sharpe (return/risk) ratios
commission
where do wealthy clients get their money?
what happens if you never rebalance
VaR of stocks and bonds
4. Monitoring performance and adherence to policy - reviewing IPS on regular basis
market timing
hourly
purpose of the funds to be invested
responsibilities of the client
5. Selling loses so you avoid capital gain taxes
who governs these services
what Warren Buffet says about diversifying over time with $ cost averaging
how 15-20 stocks create diversified portfolio
tax loss harvesting
6. Commission - fee - salary - hourly fee for service
systematic risk
4 ways of getting paid
sources of taxable return
working at community bank
7. 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
spreading risk
investment policy statement
two rates that returns are taxed by
iowa trust code requires the trustee to consider
8. Don't want stocks highly correlated if trying to diversify
responsibilities of the client
rebalancing recommendations
how time impacts risk
why correlation matters
9. Weighted average of the expected returns of its components
calculating expected return
how to diversify
working at community bank
what Warren Buffet says about diversifying over time with $ cost averaging
10. 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
reasons to retain certain assets
risk-free investment
idiosyncratic risk
best client suited for fee based
11. Strategy of reducing idiosyncratic risk by making two investments whose payoffs are unrelated
what does rebalancing control?
spreading risk
hourly
how to rebalance for no tax cost?
12. Execution at 18 mo intervals provides most of the benefits with less costs
wealth management positions
morningstar study about rebalancing
validation step of wealth management
market timing
13. 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
how time impacts risk
who is suited for wealth management career
responsibilities of the client
investment objectives
14. Income (dividends - interest - rents) - capital gain/ loss in value
What risk measurement is based on
dollar cost averaging
what makes a good benchmark
sources of taxable return
15. 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
qualified dividends
reasons to retain certain assets
commission
investment policy statement
16. 4 yrs qualified investment work experience - completion of cfa program - 3 6hr exams - 2-5 yrs to complete
working at community bank
4 ways of getting paid
purpose of the funds to be invested
chartered financial analyst
17. 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
best client suited for fee based
purpose of the funds to be invested
working at brokerage
how time impacts risk
18. High ethical standards - communication skills - quantitative and analytical skills - attention to detail - work independently - current events - financial matters - client interests
drivers of return
who is suited for wealth management career
chartered financial analyst
investment policy statement
19. Representation in domestic and international - large - mid - small cap - no individual stock more than 5% of total portfolio
diversifying stocks
working at community bank
best client suited for fee based
measuring risk
20. Risk by keeping investor with pre-determined risk profile
what does rebalancing control?
wealth management recommendation about rebalancing
how to rebalance for no tax cost?
offer wealth management services
21. 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?
what does rebalancing force?
hourly
what to ask if client has inappropriate allocation
VaR of stocks and bonds
22. Strategy of reducing idiosyncratic risk by making two investments whose payoffs are unrelated
working at large national bank
best client suited for commission based
iowa trust code requires the trustee to consider
spreading risk
23. Brokerages - insurance companies
use fee based model
use commissions model
spreading risk
iowa trust code requires the trustee to consider
24. Reduce risk and can increase returns
commission
hourly
what diversification can do
chartered financial analyst
25. Sell assets with losses and offset with sales of those with gains - rebalance in tax advantaged accounts (IRA or 401K)
how to rebalance for no tax cost?
how 15-20 stockswill not diversify portfolio
investment objectives
commission
26. 3 yrs qualified work experience - complete cfp courses and exams - financial planning - employee benefits planning - investment planning - risk management - retirement planning
certified financial planner
market timing
who use salary based model
two rates that returns are taxed by
27. Strategy of reducing idiosyncratic risks by making two investments with opposing risks
diversification
use commissions model
hedging risk
how to computer std. dev
28. Amount of money you have paid into the house
expected value of probability theory
purpose of the funds to be invested
working at large national bank
VaR of adjustable rate mortgage?
29. Strategy of reducing idiosyncratic risks by making two investments with opposing risks
systematic risk
how to protect client from unjustified risks?
hedging risk
what to ask if client has inappropriate allocation
30. Commission - fee - salary - hourly fee for service
certified financial planner
4 ways of getting paid
use commissions model
how to diversify
31. Inherited wealth - suddenly wealthy - endowments and foundations
who else will you serve?
what does rebalancing control?
how to choose where to work
fee
32. Inherited wealth - suddenly wealthy - endowments and foundations
rebalancing
who else will you serve?
what does rebalancing control?
how to choose where to work
33. Bonds: coupon income + changes in price due to changes in interest rates - stocks: dividend yield + growth in earnings + change in p/e
what happens if you never rebalance
dollar cost averaging
drivers of return
working at brokerage
34. 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?
VaR of adjustable rate mortgage?
what happens if you never rebalance
risk
35. 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
chartered financial analyst
what does rebalancing control?
working at large national bank
hourly
36. St. dev. - correlation or R2 - VaR- value at risk
spreading risk
working at community bank
measuring risk
who is suited for wealth management career
37. 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
offer wealth management services
what Warren Buffet says about diversifying over time with $ cost averaging
how to compute variance
asset allocation
38. Square root of variance/initial investment
monitor step of wealth management
how to computer std. dev
who use hourly
investment objectives
39. 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
how to diversify
who is best suited for hourly wealth management
deviation of payoff from expected value
purpose of the funds to be invested
40. High ethical standards - communication skills - quantitative and analytical skills - attention to detail - work independently - current events - financial matters - client interests
diversifying bonds
wealth management positions
who is suited for wealth management career
how to compute variance
41. 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
who use salary based model
spreading risk
42. Brokerages - investment banks - commercial banks - trust departments - large comprehensive accounting firms - independent financial planners - insurance companies
monitor step of wealth management
certified financial planner
offer wealth management services
tax loss harvesting
43. Bonds: coupon income + changes in price due to changes in interest rates - stocks: dividend yield + growth in earnings + change in p/e
investment policy statement
drivers of return
measuring risk
what to ask if client has inappropriate allocation
44. Measure of uncertainty about the future payoff to an investment measured over some time horizon and relative to a benchmark
risk
monitor step of wealth management
drivers of return
probability theory
45. 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
reasons to retain certain assets
what does rebalancing force?
what diversification can do
how time impacts risk
46. Appropriate credit quality and interest rate risk - no individual corporate issuer more than 5%
diversifying bonds
steps of wealth management
what to ask if client has inappropriate allocation
responsibilities of the client
47. 4 yrs qualified investment work experience - completion of cfa program - 3 6hr exams - 2-5 yrs to complete
calculating expected return
chartered financial analyst
salary
diversifying stocks
48. 0 company could fail
where do wealthy clients get their money?
certified financial planner
diversifying stocks
VaR of stocks and bonds
49. Culture/philosophy - money - risk/reward - career trajectory - other support roles
certified financial planner
rebalancing
how to choose where to work
how to rebalance for no tax cost?
50. The theoretical rate of return of an investment with no risk of financial loss - i.e. short dated domestic govt bond (default benchmark)
risk-free investment
rebalancing recommendations
hedging risk
what does rebalancing control?