AWMA Exam 1 Questions With Correct
Answers
Which one of the following characteristics is more correct concerning younger
| | | | | | | | | | |
wealthy individuals (millennials and GenXers)?
| | | |
A) Younger wealthy individuals are seeking more technological options in financial
| | | | | | | | | |
planning.
|
B) Younger wealthy individuals have not experienced significant bear markets.
| | | | | | | | |
C) Younger wealthy individuals have directly opposite financial needs as
| | | | | | | | | |
compared to baby boomers. | | |
D) Younger wealthy individuals likely want to be advised by one of their own
| | | | | | | | | | | | | |
generation. - CORRECT ANSWER✔✔-A) Younger wealthy investors (millennials
| | | | | | | |
and GenXers) are seeking fresh approaches to financial planning, including more
| | | | | | | | | | |
technological options. In addition, young clients also have been through fewer
| | | | | | | | | | |
years of investing but have experienced several significant bear markets. Mod 1
| | | | | | | | | | |
One of the most important life goals of wealthy individuals is
| | | | | | | | | |
A) protecting wealth.
| |
B) assuring their retirement lifestyle.
| | | |
C) minimizing taxes.
| |
D) travelling the world. - CORRECT ANSWER✔✔-D) The most frequently stated
| | | | | | | | | | |
life goals for wealthy individuals are having good health, travelling the world, and
| | | | | | | | | | | | |
,achieving financial success. To achieve financial success, the most common
| | | | | | | | | |
financial goals are protecting wealth, assuring retirement lifestyle, minimizing
| | | | | | | | |
taxes, and leaving an estate to their heirs. Mod 1
| | | | | | | | |
One of the most important financial goals of wealthy individuals is
| | | | | | | | | |
A)leaving an estate to their heirs.
| | | | |
B)having good health. | |
C)none of these. | |
D)travelling the world. - CORRECT ANSWER✔✔-A) To achieve financial success,
| | | | | | | | | |
the most common financial goals are protecting wealth, assuring retirement
| | | | | | | | | |
lifestyle, minimizing taxes, and leaving an estate to their heirs. The most
| | | | | | | | | | | |
frequently stated life goals for wealthy individuals are having good health,
| | | | | | | | | | |
travelling the world, and achieving financial success. Mod 1
| | | | | | | |
Which one of the following statements is true regarding sustainable and
| | | | | | | | | | |
responsible investments (SRIs)? | |
A) Shareholder activism is a part of SRIs.
| | | | | | |
B) Baby boomers are the most likely demographic to invest in SRIs.
| | | | | | | | | | |
C) SRIs provide lower returns, but are a "feel-good" option for investors.
| | | | | | | | | | |
D) SRIs provide only a negative filter of staying away from certain assets. -
| | | | | | | | | | | | | |
CORRECT ANSWER✔✔-A) Shareholder activism also plays a part in getting
| | | | | | | | | |
companies to listen by passing shareholder resolutions. Sustainable and
| | | | | | | | |
responsible investing has been found to be of importance to Gen Xers and
| | | | | | | | | | | | |
millennials. Several studies have now shown taking into account ESG factors
| | | | | | | | | | |
actually increases long-term returns. For SRI investments, the adviser needs to set
| | | | | | | | | | |
,up a series of filters to determine a client's specific wants for a sustainable fund.
| | | | | | | | | | | | | | | |
For instance, tobacco may be a main prohibition for one client, while religious
| | | | | | | | | | | | |
aspects may be a positive filter for that same or another client. Mod 1
| | | | | | | | | | | | |
Concerning control of assets in a private foundation versus a donor-advised fund,
| | | | | | | | | | | |
which one of the following aspects is true for a donor-advised fund?
| | | | | | | | | | |
A)Remains with founder's values | | |
B) Needs lengthy IRS approval
| | | |
C) Easier and less expensive to launch
| | | | | |
D) Must pay out a certain percentage each year - CORRECT ANSWER✔✔-C)
| | | | | | | | | | | |
Donor-advised funds (DAFs) are growing in popularity and have the advantage of
| | | | | | | | | | | |
being easier and cheaper to launch and not requiring the lengthy IRS approval
| | | | | | | | | | | | |
that private foundations need. Values may change with a DAF, as major
| | | | | | | | | | | |
contributors have input into this type of charitable fund. In addition, only private
| | | | | | | | | | | | |
foundations must make payouts each year; DAFs have flexibility with this. Mod 1
| | | | | | | | | | | |
If a high net worth (HNW) business owner came to your office, what would you
| | | | | | | | | | | | | | |
expect her financials to show, as compared to a HNW non-business owner?
| | | | | | | | | | |
A) About the same income, with more assets and higher net worth
| | | | | | | | | | |
B) About the same income with more assets, yet lower net worth
| | | | | | | | | | |
C) Higher income, with fewer assets and lower net worth
| | | | | | | | |
D) Lower income, with fewer assets and lower net worth - CORRECT
| | | | | | | | | | | |
ANSWER✔✔-A) Income is similar between all HNW professions; however, assets | | | | | | | | | |
and net worth include business assets, so more assets and higher net worth are
| | | | | | | | | | | | | |
common for HNW business owners. Many business owners are exposed to a large
| | | | | | | | | | | |
, | amount of unsystematic risk because a significant amount of their capital is often
| | | | | | | | | | | |
| tied up in their business. Mod 1
| | | | | |
When considering the social impact goals of a high net worth client, wealth
| | | | | | | | | | | | |
planners should expect those clients to | | | | |
A)not want their planner to be involved in the charitable concern.
| | | | | | | | | |
B)want their children to also develop charitable tendencies.
| | | | | | |
C) only want the charitable concern in order to reduce tax exposure.
| | | | | | | | | | |
D) overwhelmingly donate assets and not volunteer their time. - CORRECT
| | | | | | | | | | |
ANSWER✔✔-B) The reasons high net worth individuals make charitable | | | | | | | | |
donations are largely humanitarian in nature—only half of these individuals
| | | | | | | | | |
donate to reduce tax exposure as a secondary concern. It is important for
| | | | | | | | | | | | |
advisers to be aware of and research any social impact their clients find
| | | | | | | | | | | | |
important. In addition, the preferred methods of accomplishing social impact in
| | | | | | | | | | |
the U.S., as compared to worldwide, are more religious and also include more
| | | | | | | | | | | | |
aspects that are nonfinancial, such as volunteerism. Mod 1
| | | | | | | |
As compared to younger high net worth individuals, older wealthy individuals
| | | | | | | | | | |
describe their financial needs as more geared toward
| | | | | | |
A)managing cash and credit. | | |
B) digital meetings.
| |
C)investing outside of equities. | | |
D) obtaining and using credit. - CORRECT ANSWER✔✔-A) Older clients describe
| | | | | | | | | | |
their needs as straightforward: managing cash and credit, and growing
| | | | | | | | | |
investments. Younger clients indicate more complex needs, such as a reluctance
| | | | | | | | | | |
Answers
Which one of the following characteristics is more correct concerning younger
| | | | | | | | | | |
wealthy individuals (millennials and GenXers)?
| | | |
A) Younger wealthy individuals are seeking more technological options in financial
| | | | | | | | | |
planning.
|
B) Younger wealthy individuals have not experienced significant bear markets.
| | | | | | | | |
C) Younger wealthy individuals have directly opposite financial needs as
| | | | | | | | | |
compared to baby boomers. | | |
D) Younger wealthy individuals likely want to be advised by one of their own
| | | | | | | | | | | | | |
generation. - CORRECT ANSWER✔✔-A) Younger wealthy investors (millennials
| | | | | | | |
and GenXers) are seeking fresh approaches to financial planning, including more
| | | | | | | | | | |
technological options. In addition, young clients also have been through fewer
| | | | | | | | | | |
years of investing but have experienced several significant bear markets. Mod 1
| | | | | | | | | | |
One of the most important life goals of wealthy individuals is
| | | | | | | | | |
A) protecting wealth.
| |
B) assuring their retirement lifestyle.
| | | |
C) minimizing taxes.
| |
D) travelling the world. - CORRECT ANSWER✔✔-D) The most frequently stated
| | | | | | | | | | |
life goals for wealthy individuals are having good health, travelling the world, and
| | | | | | | | | | | | |
,achieving financial success. To achieve financial success, the most common
| | | | | | | | | |
financial goals are protecting wealth, assuring retirement lifestyle, minimizing
| | | | | | | | |
taxes, and leaving an estate to their heirs. Mod 1
| | | | | | | | |
One of the most important financial goals of wealthy individuals is
| | | | | | | | | |
A)leaving an estate to their heirs.
| | | | |
B)having good health. | |
C)none of these. | |
D)travelling the world. - CORRECT ANSWER✔✔-A) To achieve financial success,
| | | | | | | | | |
the most common financial goals are protecting wealth, assuring retirement
| | | | | | | | | |
lifestyle, minimizing taxes, and leaving an estate to their heirs. The most
| | | | | | | | | | | |
frequently stated life goals for wealthy individuals are having good health,
| | | | | | | | | | |
travelling the world, and achieving financial success. Mod 1
| | | | | | | |
Which one of the following statements is true regarding sustainable and
| | | | | | | | | | |
responsible investments (SRIs)? | |
A) Shareholder activism is a part of SRIs.
| | | | | | |
B) Baby boomers are the most likely demographic to invest in SRIs.
| | | | | | | | | | |
C) SRIs provide lower returns, but are a "feel-good" option for investors.
| | | | | | | | | | |
D) SRIs provide only a negative filter of staying away from certain assets. -
| | | | | | | | | | | | | |
CORRECT ANSWER✔✔-A) Shareholder activism also plays a part in getting
| | | | | | | | | |
companies to listen by passing shareholder resolutions. Sustainable and
| | | | | | | | |
responsible investing has been found to be of importance to Gen Xers and
| | | | | | | | | | | | |
millennials. Several studies have now shown taking into account ESG factors
| | | | | | | | | | |
actually increases long-term returns. For SRI investments, the adviser needs to set
| | | | | | | | | | |
,up a series of filters to determine a client's specific wants for a sustainable fund.
| | | | | | | | | | | | | | | |
For instance, tobacco may be a main prohibition for one client, while religious
| | | | | | | | | | | | |
aspects may be a positive filter for that same or another client. Mod 1
| | | | | | | | | | | | |
Concerning control of assets in a private foundation versus a donor-advised fund,
| | | | | | | | | | | |
which one of the following aspects is true for a donor-advised fund?
| | | | | | | | | | |
A)Remains with founder's values | | |
B) Needs lengthy IRS approval
| | | |
C) Easier and less expensive to launch
| | | | | |
D) Must pay out a certain percentage each year - CORRECT ANSWER✔✔-C)
| | | | | | | | | | | |
Donor-advised funds (DAFs) are growing in popularity and have the advantage of
| | | | | | | | | | | |
being easier and cheaper to launch and not requiring the lengthy IRS approval
| | | | | | | | | | | | |
that private foundations need. Values may change with a DAF, as major
| | | | | | | | | | | |
contributors have input into this type of charitable fund. In addition, only private
| | | | | | | | | | | | |
foundations must make payouts each year; DAFs have flexibility with this. Mod 1
| | | | | | | | | | | |
If a high net worth (HNW) business owner came to your office, what would you
| | | | | | | | | | | | | | |
expect her financials to show, as compared to a HNW non-business owner?
| | | | | | | | | | |
A) About the same income, with more assets and higher net worth
| | | | | | | | | | |
B) About the same income with more assets, yet lower net worth
| | | | | | | | | | |
C) Higher income, with fewer assets and lower net worth
| | | | | | | | |
D) Lower income, with fewer assets and lower net worth - CORRECT
| | | | | | | | | | | |
ANSWER✔✔-A) Income is similar between all HNW professions; however, assets | | | | | | | | | |
and net worth include business assets, so more assets and higher net worth are
| | | | | | | | | | | | | |
common for HNW business owners. Many business owners are exposed to a large
| | | | | | | | | | | |
, | amount of unsystematic risk because a significant amount of their capital is often
| | | | | | | | | | | |
| tied up in their business. Mod 1
| | | | | |
When considering the social impact goals of a high net worth client, wealth
| | | | | | | | | | | | |
planners should expect those clients to | | | | |
A)not want their planner to be involved in the charitable concern.
| | | | | | | | | |
B)want their children to also develop charitable tendencies.
| | | | | | |
C) only want the charitable concern in order to reduce tax exposure.
| | | | | | | | | | |
D) overwhelmingly donate assets and not volunteer their time. - CORRECT
| | | | | | | | | | |
ANSWER✔✔-B) The reasons high net worth individuals make charitable | | | | | | | | |
donations are largely humanitarian in nature—only half of these individuals
| | | | | | | | | |
donate to reduce tax exposure as a secondary concern. It is important for
| | | | | | | | | | | | |
advisers to be aware of and research any social impact their clients find
| | | | | | | | | | | | |
important. In addition, the preferred methods of accomplishing social impact in
| | | | | | | | | | |
the U.S., as compared to worldwide, are more religious and also include more
| | | | | | | | | | | | |
aspects that are nonfinancial, such as volunteerism. Mod 1
| | | | | | | |
As compared to younger high net worth individuals, older wealthy individuals
| | | | | | | | | | |
describe their financial needs as more geared toward
| | | | | | |
A)managing cash and credit. | | |
B) digital meetings.
| |
C)investing outside of equities. | | |
D) obtaining and using credit. - CORRECT ANSWER✔✔-A) Older clients describe
| | | | | | | | | | |
their needs as straightforward: managing cash and credit, and growing
| | | | | | | | | |
investments. Younger clients indicate more complex needs, such as a reluctance
| | | | | | | | | | |
