Final Exam Research With Complete Solution 2024

1. According to research done over hundreds of years, what percentage of families all over the world have been able to transfer significant financial wealth down beyond two generations? • 10% • 20% • 40% • 30% - correct answer-• 10% 2. Ben is an experienced wealth manager who works primarily with large multi-generational family clients. He has worked with many of his clients for decades. Ben and his firm both believe strongly in using a strategic asset allocation model and use mostly so-called passive investment funds (e.g., indexed funds) to represent the asset classes that make up the portfolio models the firm manages. One of Ben's younger clients, Brad, from a long-time family for which Ben has worked, has recently asked him about "smart-beta" and "enhanced indexing" that he's read about recently. Ben quickly counters that these new strategies are nothing more than another attempt to beat or time the market and the only allure is that some of these new strategies offer lower costs, somewhere between traditional active strategies and those that Ben and his firm offer. Brad's mother, Sue, quickly agrees with Ben that they should not change th - correct answer-outcome bias 3. Research done by Grubman, Jaffe and others indicates the following challenges and commonalities of many so-called "cross-class" couples of wealth, where one individual (who did not grow up with significant wealth) marries into a family of wealth. • theft between spouses, lying and dishonesty, children choose to side with the parent who comes from money • shoplifting by the individual new to wealth, different opinions about how to spend the money, family of wealth distances themselves from individual who married into the family • above average divorce rates, anger and resentment, feelings of inadequacy of the individual who married into the family of wealth • arguments about priorities and spending money, jealousy, sometimes leads to chronic illness - correct answer- 4. Dorrie has read and been told for years that she should "buy on the dips" (i.e., invest more money when the market goes down) and that seems to be in line with her long-term goals, time horizon, and relatively aggressive risk tolerance. She has been saving and investing for retirement in this way for nearly 25 years now and has been happy with above average returns using this strategy. Over the last 10-15 years, however, she's noticed a difference in the market's behavior which has produced two massive sell-offs and subsequent rebounds as opposed to more regular dips of 10%-20% like she experienced over the first 10-15 years. This is perplexing to Dorrie and she is not sure whether to stick with her long-term investing strategy or make adjustments to it in case the market climate has changed. Dorrie may be suffering from which of the following? • cognitive dissonance • mental accounting • confirmation bias - correct answer-• conservatism bias 5. The following document is used to define the family unit's purpose and the principles by which it will operate. It usually contains the following: family goals, values, principles, and purpose. This document often helps the family define priorities, strengths, and weaknesses. It may also help the family describe qualities and characteristics it will encourage and help develop in family members. • family values statement • family mission statement • family charter • family governance doctrine - correct answer-family mission statement 6. According to widely circulated research, each of the following, except for which below, ranks at or near the top of the priorities of wealth families when it comes to educating their children? • investment performance and risk measurement and management • philanthropy • social responsibility • entrepreneurial skills and values - correct answer- 7. Jeff, a CPWA certificant, was issued a suspension by the Institute's Professional Review Board on May 1 of the current year. He has until _______ (of the same year) to file an appeal to the Institute. • May 31 • June 15 • June 30 • July 31 - correct answer-• June 30 8. Which of the following is not one of the three foundational and distinct roles that wealth managers should identify and clarify when analyzing a family unit and its members when a family business is involved? • role working within the family business • role representing the family within the community