NEWEST ACCREDITED INVESTMENT
FIDUCIARY (AIF) EXAM | ULTIMATE EXAM
WITH CORRECT ANSWERS AND
RATIONALES FOR CERTIFICATION
SUCCESS
1. The primary standard of conduct for a fiduciary
under the Uniform Prudent Investor Act (UPIA) is:
A) Prudence (care, skill, and caution)
B) Maximization of returns
C) Minimization of risk
D) Avoidance of all losses
E) Guaranteed performance
Correct answer: A
Rationale: The UPIA establishes prudence as the
standard.
2. Under ERISA, a fiduciary must act:
A) Solely in the interest of plan participants and
beneficiaries
B) Solely in the interest of the plan sponsor
,C) Solely in the interest of the investment manager
D) Solely in the interest of the trustee
E) Solely in the interest of the employer
Correct answer: A
Rationale: ERISA § 404 requires that fiduciaries act
for the exclusive benefit of participants and
beneficiaries.
3. A fiduciary's duty of loyalty requires that the
fiduciary:
A) Avoid conflicts of interest and act in the best
interest of the client
B) Maximize investment returns at all costs
C) Minimize investment risk regardless of return
D) Invest only in government bonds
E) Delegate all investment decisions
Correct answer: A
Rationale: The duty of loyalty prohibits self-dealing.
,4. Under the Prudent Investor Rule, a fiduciary must
consider:
A) The portfolio as a whole, not individual
investments in isolation
B) Only individual investments
C) Only the risk-free rate
D) Only historical returns
E) Only tax implications
Correct answer: A
Rationale: The portfolio context is paramount.
5. The duty to diversify under UPIA requires that a
fiduciary:
A) Spread investments across different asset classes
and securities unless it is prudent not to do so
B) Invest all assets in a single stock
C) Invest only in bonds
D) Avoid all equities
E) Maintain 100% cash
Correct answer: A
, Rationale: Diversification is required unless
circumstances justify otherwise.
6. The "prudent expert rule" under ERISA §
404(a)(1)(B) requires that a fiduciary:
A) Act with the care, skill, prudence, and diligence of
a prudent person familiar with such matters
B) Act with the care of a layperson
C) Guarantee investment returns
D) Avoid all risk
E) Invest only in mutual funds
Correct answer: A
Rationale: ERISA uses a "prudent expert" standard
for fiduciaries.
7. The three fundamental duties of an investment
fiduciary are:
A) Duty of loyalty, duty of care (prudence), and duty
to follow the governing documents
B) Duty to maximize returns, duty to minimize risk,
and duty to report
FIDUCIARY (AIF) EXAM | ULTIMATE EXAM
WITH CORRECT ANSWERS AND
RATIONALES FOR CERTIFICATION
SUCCESS
1. The primary standard of conduct for a fiduciary
under the Uniform Prudent Investor Act (UPIA) is:
A) Prudence (care, skill, and caution)
B) Maximization of returns
C) Minimization of risk
D) Avoidance of all losses
E) Guaranteed performance
Correct answer: A
Rationale: The UPIA establishes prudence as the
standard.
2. Under ERISA, a fiduciary must act:
A) Solely in the interest of plan participants and
beneficiaries
B) Solely in the interest of the plan sponsor
,C) Solely in the interest of the investment manager
D) Solely in the interest of the trustee
E) Solely in the interest of the employer
Correct answer: A
Rationale: ERISA § 404 requires that fiduciaries act
for the exclusive benefit of participants and
beneficiaries.
3. A fiduciary's duty of loyalty requires that the
fiduciary:
A) Avoid conflicts of interest and act in the best
interest of the client
B) Maximize investment returns at all costs
C) Minimize investment risk regardless of return
D) Invest only in government bonds
E) Delegate all investment decisions
Correct answer: A
Rationale: The duty of loyalty prohibits self-dealing.
,4. Under the Prudent Investor Rule, a fiduciary must
consider:
A) The portfolio as a whole, not individual
investments in isolation
B) Only individual investments
C) Only the risk-free rate
D) Only historical returns
E) Only tax implications
Correct answer: A
Rationale: The portfolio context is paramount.
5. The duty to diversify under UPIA requires that a
fiduciary:
A) Spread investments across different asset classes
and securities unless it is prudent not to do so
B) Invest all assets in a single stock
C) Invest only in bonds
D) Avoid all equities
E) Maintain 100% cash
Correct answer: A
, Rationale: Diversification is required unless
circumstances justify otherwise.
6. The "prudent expert rule" under ERISA §
404(a)(1)(B) requires that a fiduciary:
A) Act with the care, skill, prudence, and diligence of
a prudent person familiar with such matters
B) Act with the care of a layperson
C) Guarantee investment returns
D) Avoid all risk
E) Invest only in mutual funds
Correct answer: A
Rationale: ERISA uses a "prudent expert" standard
for fiduciaries.
7. The three fundamental duties of an investment
fiduciary are:
A) Duty of loyalty, duty of care (prudence), and duty
to follow the governing documents
B) Duty to maximize returns, duty to minimize risk,
and duty to report
