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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. 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
rebalancing recommendations
drivers of return
purpose of the funds to be invested
how 15-20 stocks create diversified portfolio
2. 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
salary
diversifying bonds
market timing
qualified dividends
3. Buy low and sell high
uniform prudent investor act
best client suited for fee based
what does rebalancing force?
how 15-20 stockswill not diversify portfolio
4. Measure of uncertainty about the future payoff to an investment measured over some time horizon and relative to a benchmark
risk
best client suited for commission based
certified financial planner
two rates that returns are taxed by
5. Fees or expenses - tax consequences
reasons to retain certain assets
responsibilities of the client
needs step of wealth management
risk-free investment
6. 0 company could fail
uniform prudent investor act
VaR of stocks and bonds
wealth management recommendation about rebalancing
systematic risk
7. Define investor profile and liquidity needs over time - identify the proportion of each section in line with your risk profile - investor profile - asset allocation
timing of rebalancing
hourly
investment policy statement
needs step of wealth management
8. Purpose of the funds to be invested - investment objectives - responsibilities of the investment manager - responsibilities of the client - set allocation policy based on targets or ranges
how to diversify
investment policy statement
how time impacts risk
hedging risk
9. Brokerages - investment banks - commercial banks - trust departments - large comprehensive accounting firms - independent financial planners - insurance companies
offer wealth management services
uniform prudent investor act
Value at Risk (VaR)
how time impacts risk
10. 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
who is best suited for hourly wealth management
working at large national bank
how to computer std. dev
what return includes for mutual funds
11. 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
commission
how to protect client from unjustified risks?
iowa trust code requires the trustee to consider
steps of wealth management
12. Execution at 18 mo intervals provides most of the benefits with less costs
morningstar study about rebalancing
what Warren Buffet says about diversifying over time with $ cost averaging
What risk measurement is based on
expected value of probability theory
13. 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?
use commissions model
what to ask if client has inappropriate allocation
who else will you serve?
VaR of bank's mortgage backed securities
14. Sum of probabilities - probability weighted sum of the possible outcomes
investment objectives
expected value of probability theory
best client suited for fee based
what would happen if you were out of the stock market during the 90 best days
15. Review at least annually to manage gains/losses - clients adding or taking distributions require more frequent monitoring
wealth management recommendation about rebalancing
risk-free investment
how time impacts risk
risk
16. Target: a proportion for allocation under 'normal' circumstances - range: an allowable band for allocation under variable circumstances
use fee based model
risk-free investment
setting allocation policy based on targets and ranges
where do wealthy clients get their money?
17. Restricted and unrestricted funds - characteristics and constraints
sources of taxable return
offer wealth management services
purpose of the funds to be invested
who use hourly
18. Paid as percentage of assets under management for your advice
what Warren Buffet says about diversifying over time with $ cost averaging
idiosyncratic risk
fee
market timing
19. Probability X squared deviation of payoff from expected value
diversifying stocks
monitor step of wealth management
timing of rebalancing
how to compute variance
20. 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
risk-free investment
dollar cost averaging
how to rebalance for no tax cost?
who use hourly
21. Asset allocation and diversification
how to protect client from unjustified risks?
diversifying bonds
What risk measurement is based on
how to rebalance for no tax cost?
22. The theoretical rate of return of an investment with no risk of financial loss - i.e. short dated domestic govt bond (default benchmark)
setting allocation policy based on targets and ranges
hourly
idiosyncratic risk
risk-free investment
23. High ethical standards - communication skills - quantitative and analytical skills - attention to detail - work independently - current events - financial matters - client interests
how to diversify
who is suited for wealth management career
sources of taxable return
investment policy statement
24. Check compliance with concentration rules and diversification in the portfolio - validate the proposal or develop a new asset allocation - revision
investment objectives
measuring risk
how to choose where to work
validation step of wealth management
25. Broker/dealer- FINRA - SEC - bank exemption- fed and state regulators - employers - industry associations
how to protect client from unjustified risks?
how to choose where to work
who governs these services
VaR of adjustable rate mortgage?
26. Culture/philosophy - money - risk/reward - career trajectory - other support roles
how to choose where to work
wealth management recommendation about rebalancing
working at large national bank
investment policy statement
27. The theoretical rate of return of an investment with no risk of financial loss - i.e. short dated domestic govt bond (default benchmark)
calculating expected return
VaR of stocks and bonds
how to computer std. dev
risk-free investment
28. 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)
how 15-20 stockswill not diversify portfolio
uniform prudent investor act
fee
how to diversify
29. Private banks - mutual funds - hedge funds - trust companies - brokerages
risk
4 ways of getting paid
use fee based model
how to compute variance
30. 0 company could fail
fee
risk
VaR of stocks and bonds
timing of rebalancing
31. Never - monthly - quarterly - if more than 5% from target at month's end - if more than 5% from target at quarter's end
timing of rebalancing
asset allocation
iowa trust code requires the trustee to consider
needs step of wealth management
32. Private banks - mutual funds - retail brokerages - hedge/private equity funds
what return includes for mutual funds
who use salary based model
VaR of stocks and bonds
working at community bank
33. Target: a proportion for allocation under 'normal' circumstances - range: an allowable band for allocation under variable circumstances
Value at Risk (VaR)
morningstar study about rebalancing
fee
setting allocation policy based on targets and ranges
34. Who wants significant input on investment selections or who has very few transactions and very little change in circumstances
how to computer std. dev
working at brokerage
4 ways of getting paid
best client suited for commission based
35. Restricted and unrestricted funds - characteristics and constraints
purpose of the funds to be invested
timing of rebalancing
who is suited for wealth management career
commission
36. Income (dividends - interest - rents) - capital gain/ loss in value
VaR of bank's mortgage backed securities
asset allocation
diversifying stocks
sources of taxable return
37. Asset allocation and diversification
how to protect client from unjustified risks?
deviation of payoff from expected value
how time impacts risk
diversifying bonds
38. Brokerages - insurance companies
chartered financial analyst
probability theory
use commissions model
what diversification can do
39. Don't want stocks highly correlated if trying to diversify
use commissions model
qualified dividends
why correlation matters
working at brokerage
40. Weighted average of the expected returns of its components
calculating expected return
how to protect client from unjustified risks?
idiosyncratic risk
VaR of bank's mortgage backed securities
41. 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
who use hourly
what Warren Buffet says about diversifying over time with $ cost averaging
how time impacts risk
systematic risk
42. Purpose of the funds to be invested - investment objectives - responsibilities of the investment manager - responsibilities of the client - set allocation policy based on targets or ranges
timing of rebalancing
investment policy statement
What risk measurement is based on
what Warren Buffet says about diversifying over time with $ cost averaging
43. Precise and regular review of each investment section - risk management/ volatility check - arbitration proposals - continuous control
monitor step of wealth management
investment policy statement
spreading risk
commission
44. 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
working at large national bank
How many issues needed to create a diversified stock portfolio?
sources of taxable return
4 ways of getting paid
45. 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
diversifying bonds
wealth management positions
what happens if you never rebalance
working at community bank
46. 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
dollar cost averaging
needs step of wealth management
use fee based model
risk-free investment
47. Execution at 18 mo intervals provides most of the benefits with less costs
VaR of bank's mortgage backed securities
deviation of payoff from expected value
rebalancing
morningstar study about rebalancing
48. Payoff-expected value
who use salary based model
deviation of payoff from expected value
develop investment sections step of wealth management
tax loss harvesting
49. 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
working at large national bank
systematic risk
uniform prudent investor act
how to choose where to work
50. Check compliance with concentration rules and diversification in the portfolio - validate the proposal or develop a new asset allocation - revision
measuring risk
two rates that returns are taxed by
validation step of wealth management
expected value of probability theory