AWMA Study Guide 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
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
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.
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
$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.
,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
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
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).
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.
maintaining good health.
Wilson has a $20,000 portfolio of four different stocks. The distribution of this capital
and the betas of these stocks are shown below.
% of Portfolio Value Beta
Stock A 10% 1.1
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
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
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.
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
$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.
,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
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
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).
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.
maintaining good health.
Wilson has a $20,000 portfolio of four different stocks. The distribution of this capital
and the betas of these stocks are shown below.
% of Portfolio Value Beta
Stock A 10% 1.1
