AWMA Practice Exam Questions With
Correct Answers
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 ANSWER✔✔-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 ANSWER✔✔-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 ANSWER✔✔-
| | | | | | | | |
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 ANSWER✔✔-$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
| | | | | | | | | |
ANSWER✔✔-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 ANSWER✔✔-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 ANSWER✔✔-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
| | | | | | | | | | |
ANSWER✔✔-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 ANSWER✔✔-maintaining good health.
| | | | | | | | |
Correct Answers
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 ANSWER✔✔-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 ANSWER✔✔-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 ANSWER✔✔-
| | | | | | | | |
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 ANSWER✔✔-$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
| | | | | | | | | |
ANSWER✔✔-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 ANSWER✔✔-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 ANSWER✔✔-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
| | | | | | | | | | |
ANSWER✔✔-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 ANSWER✔✔-maintaining good health.
| | | | | | | | |
