AWMA Exam I QUESTIONS
AND VERIFIED CORRECT
ANSWERS GRADED A+
LATEST 100% GUARANTEED
PASS
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 to invest in equities, interest in digital meetings, and
a propensity toward using credit. Mod 1
Which one of the following top overall concerns was the same for those wealthy clients under
30 and above 60?
A)Understanding of risk tolerance
B)Fee transparency
,C)Strong investment performance
D)Ensuring children's well-being - CORRECT ANSWER-C) The top wealth concerns of wealthy
clients under 30 and above 60 differ greatly, but one area of agreement is wanting strong
investment performance. Under-30 clients generally want efficiency and transparency—they
want to understand what is being proposed and the costs and risks involved. They also will not
hesitate to go to other individuals or sources in order to better understand their options. This is
not the case with a typical over-60 client, who will work with just one adviser whom they trust,
and will want that adviser to have a strong understanding of their needs and risk tolerance. In
addition, younger investors are more concerned with child care and older investors with
obtaining advice about risk tolerance. Mod 1
The top reasons for a wealthy client to leave an adviser have been found to be in the general
category of
A)poor firm notoriety.
B)high fees.
C)poor investment advice.
D) poor communication. - CORRECT ANSWER-D) The top reasons a wealthy client would leave
an adviser, with the most egregious reason being first, are: not returning phone calls in a timely
manner, not being proactive with contact, not providing good ideas and advice, and not
returning emails in a timely manner. Mod 1
George's bonds fell in price on news of higher interest rates. To which one of the following risks
are George's bonds most likely to be subject?
A)Financial risk
B)Reinvestment risk
C)Interest rate ris
D) Default risk - CORRECT ANSWER-C) Interest rate risk centers on the inverse relationship of
interest rate changes and bond prices, so, in this situation, if interest rates go up, the price of
George's bonds go down. Mod2
,According to the Barnewall study, which one of the following would be a likely candidate for
complex and risky investment opportunities?
A)Corporate executives
B)Individuals with inherited wealth
C)Surgeons (medical and dental)
D)Non-surgeons (medical and dental) - CORRECT ANSWER-C) Medical and dental surgeons fall
into what Barnewall described as "active investors" who are measurably less risk averse. The
category also includes small business owners who started their business, independent CPAs and
lawyers, and entrepreneurs. Mod2
Which of the following are characteristics of the Sharpe ratio?
I. It adjusts the return for variability by using standard deviation as the measure of risk.
II. It assumes that the portfolio being evaluated is well diversified.
III. Both alpha and beta appear in the ratio formula.
IV. It indicates by how much the realized return differs from the return required by the capital
asset pricing model.
A) III and IV
B) I and II
C) I only
D I, II, and IV - CORRECT ANSWER-C) Options II, III, and IV are true of Jensen's alpha; option II is
true of the Treynor ratio. Mod2
Bill is highly confident, strong willed, and difficult to advise. Which one of the following best
describes Bill's investor personality?
, A)Guardian
B)Celebrity
C)Individualist
D)Adventurer - CORRECT ANSWER-D) An adventurer is impetuous, confident, strong willed, and
difficult to advise. Mod2
Assume a growth stock mutual fund has a beta of 1.3. If the stock market increases by 9%, you
would expect this mutual fund to
A) decrease by 9%.
B)increase by 9%.
C)increase by 11.7%.
D)decrease by 11.7%. - CORRECT ANSWER-C) You would expect any fund with a beta of 1.3 to
increase by 11.7% (1.3 × 9%). Mod2
The risk-free rate is 1.25%, the market rate of return is 8%, the standard deviation of XYZ stock is
20, and the beta of XYZ stock is 1.10. Using the capital asset pricing model in conjunction with
this information, what is the expected return of XYZ stock?
A)8.68%
B)12.2%
C)12.1%
D)7.7% - CORRECT ANSWER-A) CAPM is the risk-free rate plus beta times excess return, or Rs =
1.25% + (8% − 1.25%) 1.1 = 8.68%.
Which one of the following lists the investments in order of least risk to most risk?
AND VERIFIED CORRECT
ANSWERS GRADED A+
LATEST 100% GUARANTEED
PASS
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 to invest in equities, interest in digital meetings, and
a propensity toward using credit. Mod 1
Which one of the following top overall concerns was the same for those wealthy clients under
30 and above 60?
A)Understanding of risk tolerance
B)Fee transparency
,C)Strong investment performance
D)Ensuring children's well-being - CORRECT ANSWER-C) The top wealth concerns of wealthy
clients under 30 and above 60 differ greatly, but one area of agreement is wanting strong
investment performance. Under-30 clients generally want efficiency and transparency—they
want to understand what is being proposed and the costs and risks involved. They also will not
hesitate to go to other individuals or sources in order to better understand their options. This is
not the case with a typical over-60 client, who will work with just one adviser whom they trust,
and will want that adviser to have a strong understanding of their needs and risk tolerance. In
addition, younger investors are more concerned with child care and older investors with
obtaining advice about risk tolerance. Mod 1
The top reasons for a wealthy client to leave an adviser have been found to be in the general
category of
A)poor firm notoriety.
B)high fees.
C)poor investment advice.
D) poor communication. - CORRECT ANSWER-D) The top reasons a wealthy client would leave
an adviser, with the most egregious reason being first, are: not returning phone calls in a timely
manner, not being proactive with contact, not providing good ideas and advice, and not
returning emails in a timely manner. Mod 1
George's bonds fell in price on news of higher interest rates. To which one of the following risks
are George's bonds most likely to be subject?
A)Financial risk
B)Reinvestment risk
C)Interest rate ris
D) Default risk - CORRECT ANSWER-C) Interest rate risk centers on the inverse relationship of
interest rate changes and bond prices, so, in this situation, if interest rates go up, the price of
George's bonds go down. Mod2
,According to the Barnewall study, which one of the following would be a likely candidate for
complex and risky investment opportunities?
A)Corporate executives
B)Individuals with inherited wealth
C)Surgeons (medical and dental)
D)Non-surgeons (medical and dental) - CORRECT ANSWER-C) Medical and dental surgeons fall
into what Barnewall described as "active investors" who are measurably less risk averse. The
category also includes small business owners who started their business, independent CPAs and
lawyers, and entrepreneurs. Mod2
Which of the following are characteristics of the Sharpe ratio?
I. It adjusts the return for variability by using standard deviation as the measure of risk.
II. It assumes that the portfolio being evaluated is well diversified.
III. Both alpha and beta appear in the ratio formula.
IV. It indicates by how much the realized return differs from the return required by the capital
asset pricing model.
A) III and IV
B) I and II
C) I only
D I, II, and IV - CORRECT ANSWER-C) Options II, III, and IV are true of Jensen's alpha; option II is
true of the Treynor ratio. Mod2
Bill is highly confident, strong willed, and difficult to advise. Which one of the following best
describes Bill's investor personality?
, A)Guardian
B)Celebrity
C)Individualist
D)Adventurer - CORRECT ANSWER-D) An adventurer is impetuous, confident, strong willed, and
difficult to advise. Mod2
Assume a growth stock mutual fund has a beta of 1.3. If the stock market increases by 9%, you
would expect this mutual fund to
A) decrease by 9%.
B)increase by 9%.
C)increase by 11.7%.
D)decrease by 11.7%. - CORRECT ANSWER-C) You would expect any fund with a beta of 1.3 to
increase by 11.7% (1.3 × 9%). Mod2
The risk-free rate is 1.25%, the market rate of return is 8%, the standard deviation of XYZ stock is
20, and the beta of XYZ stock is 1.10. Using the capital asset pricing model in conjunction with
this information, what is the expected return of XYZ stock?
A)8.68%
B)12.2%
C)12.1%
D)7.7% - CORRECT ANSWER-A) CAPM is the risk-free rate plus beta times excess return, or Rs =
1.25% + (8% − 1.25%) 1.1 = 8.68%.
Which one of the following lists the investments in order of least risk to most risk?
