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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. 0 company could fail
commission
Value at Risk (VaR)
VaR of stocks and bonds
how to diversify
2. St. dev. - correlation or R2 - VaR- value at risk
morningstar study about rebalancing
rebalancing recommendations
risk-free investment
measuring risk
3. Representation in domestic and international - large - mid - small cap - no individual stock more than 5% of total portfolio
chartered financial analyst
market timing
diversifying stocks
offer wealth management services
4. Risk by keeping investor with pre-determined risk profile
what does rebalancing control?
salary
steps of wealth management
what Warren Buffet says about diversifying over time with $ cost averaging
5. 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
salary
What risk measurement is based on
qualified dividends
how 15-20 stockswill not diversify portfolio
6. Income (dividends - interest - rents) - capital gain/ loss in value
idiosyncratic risk
rebalancing recommendations
how to computer std. dev
sources of taxable return
7. Restricted and unrestricted funds - characteristics and constraints
purpose of the funds to be invested
VaR of adjustable rate mortgage?
risk-free investment
how to diversify
8. 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 to computer std. dev
how to diversify
Value at Risk (VaR)
9. Representation in domestic and international - large - mid - small cap - no individual stock more than 5% of total portfolio
monitor step of wealth management
diversifying stocks
offer wealth management services
what makes a good benchmark
10. Probability theory
What risk measurement is based on
measuring risk
Value at Risk (VaR)
expected value of probability theory
11. Recovery rate (how much get back if default)
12. Used to minimize issuer specific risks - principle of holding more than one risk at a time
why correlation matters
what does rebalancing force?
diversification
rebalancing recommendations
13. Execution at 18 mo intervals provides most of the benefits with less costs
working at community bank
morningstar study about rebalancing
wealth management positions
fee
14. Restricted and unrestricted funds - characteristics and constraints
what diversification can do
who is best suited for hourly wealth management
How many issues needed to create a diversified stock portfolio?
purpose of the funds to be invested
15. Accumulate wealth over time by spending less than they earn - invest 20% of income per year - incomes are about average - advanced degrees
where do wealthy clients get their money?
setting allocation policy based on targets and ranges
who is suited for wealth management career
chartered financial analyst
16. Brokerages - investment banks - commercial banks - trust departments - large comprehensive accounting firms - independent financial planners - insurance companies
offer wealth management services
working at brokerage
what does rebalancing force?
hourly
17. 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
purpose of the funds to be invested
working at brokerage
develop investment sections step of wealth management
salary
18. Amount of money you have paid into the house
VaR of adjustable rate mortgage?
uniform prudent investor act
use commissions model
diversification
19. Asset allocation and diversification
how to protect client from unjustified risks?
risk-free investment
offer wealth management services
how to rebalance for no tax cost?
20. Probability X squared deviation of payoff from expected value
working at large national bank
investment policy statement
drivers of return
how to compute variance
21. Asset allocation and diversification
how to protect client from unjustified risks?
diversifying stocks
risk-free investment
investment policy statement
22. Assets are comparable - style - type of securites - value and growth
how 15-20 stocks create diversified portfolio
who governs these services
uniform prudent investor act
what makes a good benchmark
23. 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
how to diversify
what return includes for mutual funds
best client suited for fee based
how to compute variance
24. Payoff X probability - payoff is the potential return of the investment
probability theory
how to diversify
responsibilities of the client
certified financial planner
25. The theoretical rate of return of an investment with no risk of financial loss - i.e. short dated domestic govt bond (default benchmark)
what diversification can do
wealth management recommendation about rebalancing
risk-free investment
develop investment sections step of wealth management
26. 3 yrs qualified work experience - complete cfp courses and exams - financial planning - employee benefits planning - investment planning - risk management - retirement planning
morningstar study about rebalancing
asset allocation
how to protect client from unjustified risks?
certified financial planner
27. Commission - fee - salary - hourly fee for service
expected value of probability theory
offer wealth management services
fee
4 ways of getting paid
28. Monitoring performance and adherence to policy - reviewing IPS on regular basis
hourly
investment objectives
responsibilities of the client
what does rebalancing force?
29. 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
hourly
How many issues needed to create a diversified stock portfolio?
timing of rebalancing
morningstar study about rebalancing
30. Who wants significant input on investment selections or who has very few transactions and very little change in circumstances
best client suited for fee based
best client suited for commission based
VaR of stocks and bonds
VaR of adjustable rate mortgage?
31. Culture/philosophy - money - risk/reward - career trajectory - other support roles
how to choose where to work
what happens if you never rebalance
commission
how to computer std. dev
32. Target: a proportion for allocation under 'normal' circumstances - range: an allowable band for allocation under variable circumstances
setting allocation policy based on targets and ranges
who is best suited for hourly wealth management
use fee based model
who use hourly
33. St. dev. - correlation or R2 - VaR- value at risk
iowa trust code requires the trustee to consider
drivers of return
wealth management recommendation about rebalancing
measuring risk
34. Broker/dealer- FINRA - SEC - bank exemption- fed and state regulators - employers - industry associations
working at community bank
reasons to retain certain assets
who governs these services
reasons to retain certain assets
35. Take account of the bank's strategy - product - recommendations - ideas and investment themes - apply allocation rules - investment proposal
develop investment sections step of wealth management
expected value of probability theory
setting allocation policy based on targets and ranges
use commissions model
36. 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
fee
working at community bank
working at large national bank
how to rebalance for no tax cost?
37. 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
How many issues needed to create a diversified stock portfolio?
what happens if you never rebalance
iowa trust code requires the trustee to consider
what does rebalancing force?
38. Precise and regular review of each investment section - risk management/ volatility check - arbitration proposals - continuous control
monitor step of wealth management
wealth management positions
hourly
dollar cost averaging
39. Payoff X probability - payoff is the potential return of the investment
probability theory
measuring risk
why correlation matters
drivers of return
40. The theoretical rate of return of an investment with no risk of financial loss - i.e. short dated domestic govt bond (default benchmark)
what diversification can do
what to ask if client has inappropriate allocation
risk-free investment
why correlation matters
41. Priority of income - growth - safety of principal - benchmarks
hedging risk
investment objectives
asset allocation
investment policy statement
42. 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
4 ways of getting paid
fee
how to diversify
best client suited for fee based
43. Ordinary income tax rate (high - up to 35%) - capital gains rate (low - 0% or 15%)
two rates that returns are taxed by
qualified dividends
how time impacts risk
morningstar study about rebalancing
44. 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
systematic risk
how time impacts risk
how 15-20 stockswill not diversify portfolio
tax loss harvesting
45. Private banks - mutual funds - retail brokerages - hedge/private equity funds
risk
what makes a good benchmark
validation step of wealth management
who use salary based model
46. Inherited wealth - suddenly wealthy - endowments and foundations
risk-free investment
idiosyncratic risk
calculating expected return
who else will you serve?
47. Appropriate credit quality and interest rate risk - no individual corporate issuer more than 5%
wealth management positions
morningstar study about rebalancing
best client suited for fee based
diversifying bonds
48. Unique risks
hedging risk
how time impacts risk
commission
idiosyncratic risk
49. Weighted average of the expected returns of its components
fee
timing of rebalancing
how 15-20 stockswill not diversify portfolio
calculating expected return
50. 3 yrs qualified work experience - complete cfp courses and exams - financial planning - employee benefits planning - investment planning - risk management - retirement planning
risk
certified financial planner
Value at Risk (VaR)
asset allocation