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






2. Paid per transaction for your idea






3. 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






4. Define investor profile and liquidity needs over time - identify the proportion of each section in line with your risk profile - investor profile - asset allocation






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






6. Investment banks - financial consultants






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






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






9. Restricted and unrestricted funds - characteristics and constraints






10. 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






11. You would have missed 96% of market's gains






12. 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






13. Fees or expenses - tax consequences






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. Income (dividends - interest - rents) - capital gain/ loss in value






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






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






18. Get paid on hourly basis for advice






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






20. Don't want stocks highly correlated if trying to diversify






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






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






23. 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






24. Brokerages - insurance companies






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






26. Restricted and unrestricted funds - characteristics and constraints






27. Private banks - mutual funds - retail brokerages - hedge/private equity funds






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






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






30. Payoff-expected value






31. Take account of the bank's strategy - product - recommendations - ideas and investment themes - apply allocation rules - investment proposal






32. Ordinary income tax rate (high - up to 35%) - capital gains rate (low - 0% or 15%)






33. 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






34. 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






35. Asset allocation and diversification






36. 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






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






38. 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






39. 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






40. Private banker - financial advisor - insurance agent - research analyst - portfolio manager - mutual fund manager/ marketer - hedge fun manager - family office - fund of funds manager - private equity manager/ analyst - financial consultant






41. Weighted average of the expected returns of its components






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






43. Probability X squared deviation of payoff from expected value






44. 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






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






46. Weighted average of the expected returns of its components






47. 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






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






49. Buy low and sell high






50. Income (dividends - interest - rents) - capital gain/ loss in value