AWMA Practice Exam Questions
Answered Correctly (Qs) 2026 update
Baby boomers and older GenXers as compared to millennials and younger Gen Xers-
-Are likely to be advised by a millennial adviser
-Have financial planning needs that has stayed relatively the same over many years
-Have not experienced significant bear markets
-Are generally seeking many more technological options in financial planning - CORRECT ANSWERS
Have financial planning needs that has stayed relatively the same over many years
Dan has bonds maturing in two weeks. Since he bought the bonds interest rates have fallen. To which
one these risks are Dan's bonds most likely to be subject?
-Financial risk
-Default risk
-Reinvestment rate risk
-Interest rate risk - CORRECT ANSWERS Reinvestment rate risk
The relationship between investment strategy and investment policy is one in which
-investment strategy is subservient to investment policy.
-investment policy is determined by investment strategy.
-investment strategy dictates the asset categories to be incorporated into the investment policy.
-investment policy is established once the investment strategies to be used are agreed upon.
,investment strategy is subservient to investment policy. - CORRECT ANSWERS
,If ABC Corporation has net profits of $100,000 and distributes $50,000 as dividends. what is its taxable
income?
-$50,000
-$0
-$100,000
-$25,000 - CORRECT ANSWERS $100,000
Joseph, age 60, is a taxpayer who has a considerable amount of income that is not subject to
withholding. He has not made any estimated payments during the year. At a planning review session in
mid-December, his adviser informs him that he's approximately $25,000 underwithheld. What course of
action might Joseph follow to avoid an underpayment penalty?
-Make an estimated tax payment before the end of the year. This will make up for any
underwithholding.
-Initiate a $25,000 distribution from his IRA account, and direct that 100% of the distribution be
withheld for federal income tax before year-end. This will make up for any underwithholding.
-Make an estimated tax payment in December and another before the January 15 deadline for the
fourth quarter. This will make up for any underwithholding.
-No exceptions to the underpayment penalty are available. - CORRECT ANSWERS Initiate a
$25,000 distribution from his IRA account, and direct that 100% of the distribution be withheld for
federal income tax before year-end. This will make up for any underwithholding
Which of these statements accurately describe characteristics of using life insurance for the informal
funding of a nonqualified deferred compensation plan?
It represents an asset that may be purchased to fund the employer's unsecured promise to pay deferred
amounts to the employee.
It offers the advantage of being able to fund a death benefit immediately.
It offers the advantage of various settlement options.
,It offers the advantage of simplified administration since death proceeds are paid directly to an
employee's surviving spouse or other beneficiary.
-II and IV
-I and II
-I, II, and III
-I and III - CORRECT ANSWERS I, II, and III
Which statement best explains the unauthorized practice of law?
-A non-attorney who discusses with a licensed attorney whether provisions in their client's will are
necessary
-A non-attorney who advises a client to have their estate plan updated
-A non-attorney who advises a client of potential "red flags" in their estate plan
-A non-attorney who advises a client to take actions that will affect their property or legal rights -
CORRECT ANSWERS A non-attorney who advises a client to take actions that will affect their
property or legal rights
Changes that have occurred since investment firms changed from private partnerships to publicly traded
companies include all of these except
-partners no longer share in both the profits and losses of the firm.
-risk taking has increased.
-there is greater individual accountability.
-profits can be privatized (bonuses) and losses socialized (bailouts). - CORRECT ANSWERS
there is greater individual accountability.
The most important stated life goal of wealthy individuals is
, -assuring retirement lifestyle.
-maintaining good health.
-protecting wealth.
-leaving an estate to heirs. - CORRECT ANSWERS maintaining good health.
Wilson has a $20,000 portfolio of four different stocks. The distribution of this capital and the betas of
these stocks are shown below.
% of Portfolio Value Beta
Stock A 10% 1.1
Stock B 20% 1.15
Stock C 30% 1.3
Stock D 40% 1.25
What is the weighted-average beta of Wilson's stock portfolio? - CORRECT ANSWERS 1.23
Which of these is an advantage of equity REITs over mortgage REITs?
-Equity REITs have the right to repossess the underlying property if the mortgage REIT fails to make its
mortgage payments.
-Equity REITs participate in the capital gains of the mortgages, whereas mortgage REITs receive only the
coupon payments.
-Equity REITs retain the right to the potential appreciation of a property, but mortgage REITs retain the
right to only the property's rental income.
-Equity REITs can participate in the appreciation of the underlying properties. - CORRECT ANSWERS
Equity REITs can participate in the appreciation of the underlying properties.
Answered Correctly (Qs) 2026 update
Baby boomers and older GenXers as compared to millennials and younger Gen Xers-
-Are likely to be advised by a millennial adviser
-Have financial planning needs that has stayed relatively the same over many years
-Have not experienced significant bear markets
-Are generally seeking many more technological options in financial planning - CORRECT ANSWERS
Have financial planning needs that has stayed relatively the same over many years
Dan has bonds maturing in two weeks. Since he bought the bonds interest rates have fallen. To which
one these risks are Dan's bonds most likely to be subject?
-Financial risk
-Default risk
-Reinvestment rate risk
-Interest rate risk - CORRECT ANSWERS Reinvestment rate risk
The relationship between investment strategy and investment policy is one in which
-investment strategy is subservient to investment policy.
-investment policy is determined by investment strategy.
-investment strategy dictates the asset categories to be incorporated into the investment policy.
-investment policy is established once the investment strategies to be used are agreed upon.
,investment strategy is subservient to investment policy. - CORRECT ANSWERS
,If ABC Corporation has net profits of $100,000 and distributes $50,000 as dividends. what is its taxable
income?
-$50,000
-$0
-$100,000
-$25,000 - CORRECT ANSWERS $100,000
Joseph, age 60, is a taxpayer who has a considerable amount of income that is not subject to
withholding. He has not made any estimated payments during the year. At a planning review session in
mid-December, his adviser informs him that he's approximately $25,000 underwithheld. What course of
action might Joseph follow to avoid an underpayment penalty?
-Make an estimated tax payment before the end of the year. This will make up for any
underwithholding.
-Initiate a $25,000 distribution from his IRA account, and direct that 100% of the distribution be
withheld for federal income tax before year-end. This will make up for any underwithholding.
-Make an estimated tax payment in December and another before the January 15 deadline for the
fourth quarter. This will make up for any underwithholding.
-No exceptions to the underpayment penalty are available. - CORRECT ANSWERS Initiate a
$25,000 distribution from his IRA account, and direct that 100% of the distribution be withheld for
federal income tax before year-end. This will make up for any underwithholding
Which of these statements accurately describe characteristics of using life insurance for the informal
funding of a nonqualified deferred compensation plan?
It represents an asset that may be purchased to fund the employer's unsecured promise to pay deferred
amounts to the employee.
It offers the advantage of being able to fund a death benefit immediately.
It offers the advantage of various settlement options.
,It offers the advantage of simplified administration since death proceeds are paid directly to an
employee's surviving spouse or other beneficiary.
-II and IV
-I and II
-I, II, and III
-I and III - CORRECT ANSWERS I, II, and III
Which statement best explains the unauthorized practice of law?
-A non-attorney who discusses with a licensed attorney whether provisions in their client's will are
necessary
-A non-attorney who advises a client to have their estate plan updated
-A non-attorney who advises a client of potential "red flags" in their estate plan
-A non-attorney who advises a client to take actions that will affect their property or legal rights -
CORRECT ANSWERS A non-attorney who advises a client to take actions that will affect their
property or legal rights
Changes that have occurred since investment firms changed from private partnerships to publicly traded
companies include all of these except
-partners no longer share in both the profits and losses of the firm.
-risk taking has increased.
-there is greater individual accountability.
-profits can be privatized (bonuses) and losses socialized (bailouts). - CORRECT ANSWERS
there is greater individual accountability.
The most important stated life goal of wealthy individuals is
, -assuring retirement lifestyle.
-maintaining good health.
-protecting wealth.
-leaving an estate to heirs. - CORRECT ANSWERS maintaining good health.
Wilson has a $20,000 portfolio of four different stocks. The distribution of this capital and the betas of
these stocks are shown below.
% of Portfolio Value Beta
Stock A 10% 1.1
Stock B 20% 1.15
Stock C 30% 1.3
Stock D 40% 1.25
What is the weighted-average beta of Wilson's stock portfolio? - CORRECT ANSWERS 1.23
Which of these is an advantage of equity REITs over mortgage REITs?
-Equity REITs have the right to repossess the underlying property if the mortgage REIT fails to make its
mortgage payments.
-Equity REITs participate in the capital gains of the mortgages, whereas mortgage REITs receive only the
coupon payments.
-Equity REITs retain the right to the potential appreciation of a property, but mortgage REITs retain the
right to only the property's rental income.
-Equity REITs can participate in the appreciation of the underlying properties. - CORRECT ANSWERS
Equity REITs can participate in the appreciation of the underlying properties.
