Test your basic knowledge |

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






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






3. Who wants significant input on investment selections or who has very few transactions and very little change in circumstances






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






5. Who wants significant input on investment selections or who has very few transactions and very little change in circumstances






6. Assets are comparable - style - type of securites - value and growth






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






8. 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






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






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






11. 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






12. 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






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






14. Restricted and unrestricted funds - characteristics and constraints






15. 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






16. Assets are comparable - style - type of securites - value and growth






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






18. Selling loses so you avoid capital gain taxes






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






20. 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






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






22. 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






23. 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






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






25. Reduce risk and can increase returns






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






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






28. Paid per transaction for your idea






29. Payoff X probability - payoff is the potential return of the investment






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






31. If stocks are chosen carefully to create lowest possible correlation of returns - if those stocks are monitored carefully to assure that they will continue to have uncorrelated returns






32. Payoff X probability - payoff is the potential return of the investment






33. 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






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






35. Reduce risk and can increase returns






36. Asset allocation and diversification






37. Unique risks






38. Get paid on hourly basis for advice






39. 3 yrs qualified work experience - complete cfp courses and exams - financial planning - employee benefits planning - investment planning - risk management - retirement planning






40. Restricted and unrestricted funds - characteristics and constraints






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






42. 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






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






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






45. Amount of money you have paid into the house






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






47. Payoff-expected value






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






49. 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






50. Probability X squared deviation of payoff from expected value