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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. 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






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






3. Buy low and sell high






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






5. Fees or expenses - tax consequences






6. 0 company could fail






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






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






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






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






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






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






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?






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






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






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






17. Restricted and unrestricted funds - characteristics and constraints






18. Paid as percentage of assets under management for your advice






19. Probability X squared deviation of payoff from expected value






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






21. Asset allocation and diversification






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






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






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






25. Broker/dealer- FINRA - SEC - bank exemption- fed and state regulators - employers - industry associations






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






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






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)






29. Private banks - mutual funds - hedge funds - trust companies - brokerages






30. 0 company could fail






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






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






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






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






35. Restricted and unrestricted funds - characteristics and constraints






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






37. Asset allocation and diversification






38. Brokerages - insurance companies






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






40. Weighted average of the expected returns of its components






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






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






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






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






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






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






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






48. Payoff-expected value






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






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