Question 1
A dollar-weighted return is also referred to as:
A Time-weighted return
B Internal rate of return
C Inflation-adjusted or real rate of return
D Total or holding period return
CORRECT ANSWER
B Internal rate of return
Question 2
What's a benefit of establishing a general partnership compared to establishing an S-
corporation?
A General partnerships don't require incorporation with the state
B Limited liability for owners
C Efficient taxation
D The business can own property
CORRECT ANSWER
A General partnerships don't require incorporation with the state
1
@https://www.stuvia.com/user/thestudyvault
,Question 3
Which of the following can be included in an investment advisory contract?
A A clause which indemnifies the adviser from any wrongdoing
B A statement indicating that the IA guarantees performance against a benchmark and, if it
is not met, the IA will surrender its fee for that year
C The fact that conflicts may exist, without disclosing the details of those conflicts
D That the IA is entitled to a portion of all of its clients' profits
CORRECT ANSWER
B A statement indicating that the IA guarantees performance against a benchmark and, if
it is not met, the IA will surrender its fee for that year
This is a characteristic of a fulcrum fee
Question 4
Janet has been married twice and earned more than each husband. Both marriages ended
in divorce. Her first marriage lasted for 10 years, while her second marriage lasted for 12
years. Janet is now collecting Social Security. Are either of her ex-spouses eligible to collect
Social Security based on Janet's work history?
A Yes, but only the first spouse.
B Yes, but only if each ex-spouse does not remarry.
C No, since neither spouse was married to Janet for longer than 15 years.
D Yes, but only if Janet does not remarry.
CORRECT ANSWER
2
@https://www.stuvia.com/user/thestudyvault
, B Yes, but only if each ex-spouse does not remarry.
If a person is divorced, but his marriage lasted 10 years or longer, he is entitled to receive
benefits on his ex-spouse's work history (even if she has remarried) provided:
He is unmarried;
He is age 62 or older;
His ex-spouse is entitled to Social Security or disability benefits; and
The benefit he is entitled to receive based on his own work history is less than the
benefit he would receive based on his ex-spouse's work history
Question 5
When the beta for a portfolio is 1.0, the portfolio return is 12%. What's the alpha if the
portfolio now has a beta of 1.4 and the actual return is 18.8%?
A +6.80
B -6.80
C +2.00
D -2.00
CORRECT ANSWER
C +2.00
1.4(12)=18.8
18.8-16.8=2
Question 6
Which of the following is NOT defined as an IAR?
3
@https://www.stuvia.com/user/thestudyvault
, Question 7
A A person who gives advice and is employed by an investment adviser
B A person who solicits new business for an investment adviser
C A person that manages portfolios and assets for its clients
D A person who manages IARs at an investment advisory firm
CORRECT ANSWER
A person that manages portfolios and assets for its clients
Question 8
Which of the following investments is acceptable in an IRA?
A Crude oil futures
B Landscape art
C Shares of a REIT
D Life insurance
CORRECT ANSWER
C Shares of a REIT
On the other hand, art and other collectibles, life insurance, and crude oil futures
contracts are prohibited in an IRA.
(Because they arent Securities)
Question 9
Which of the following actions will require an adviser to register under the USA?
4
@https://www.stuvia.com/user/thestudyvault
A dollar-weighted return is also referred to as:
A Time-weighted return
B Internal rate of return
C Inflation-adjusted or real rate of return
D Total or holding period return
CORRECT ANSWER
B Internal rate of return
Question 2
What's a benefit of establishing a general partnership compared to establishing an S-
corporation?
A General partnerships don't require incorporation with the state
B Limited liability for owners
C Efficient taxation
D The business can own property
CORRECT ANSWER
A General partnerships don't require incorporation with the state
1
@https://www.stuvia.com/user/thestudyvault
,Question 3
Which of the following can be included in an investment advisory contract?
A A clause which indemnifies the adviser from any wrongdoing
B A statement indicating that the IA guarantees performance against a benchmark and, if it
is not met, the IA will surrender its fee for that year
C The fact that conflicts may exist, without disclosing the details of those conflicts
D That the IA is entitled to a portion of all of its clients' profits
CORRECT ANSWER
B A statement indicating that the IA guarantees performance against a benchmark and, if
it is not met, the IA will surrender its fee for that year
This is a characteristic of a fulcrum fee
Question 4
Janet has been married twice and earned more than each husband. Both marriages ended
in divorce. Her first marriage lasted for 10 years, while her second marriage lasted for 12
years. Janet is now collecting Social Security. Are either of her ex-spouses eligible to collect
Social Security based on Janet's work history?
A Yes, but only the first spouse.
B Yes, but only if each ex-spouse does not remarry.
C No, since neither spouse was married to Janet for longer than 15 years.
D Yes, but only if Janet does not remarry.
CORRECT ANSWER
2
@https://www.stuvia.com/user/thestudyvault
, B Yes, but only if each ex-spouse does not remarry.
If a person is divorced, but his marriage lasted 10 years or longer, he is entitled to receive
benefits on his ex-spouse's work history (even if she has remarried) provided:
He is unmarried;
He is age 62 or older;
His ex-spouse is entitled to Social Security or disability benefits; and
The benefit he is entitled to receive based on his own work history is less than the
benefit he would receive based on his ex-spouse's work history
Question 5
When the beta for a portfolio is 1.0, the portfolio return is 12%. What's the alpha if the
portfolio now has a beta of 1.4 and the actual return is 18.8%?
A +6.80
B -6.80
C +2.00
D -2.00
CORRECT ANSWER
C +2.00
1.4(12)=18.8
18.8-16.8=2
Question 6
Which of the following is NOT defined as an IAR?
3
@https://www.stuvia.com/user/thestudyvault
, Question 7
A A person who gives advice and is employed by an investment adviser
B A person who solicits new business for an investment adviser
C A person that manages portfolios and assets for its clients
D A person who manages IARs at an investment advisory firm
CORRECT ANSWER
A person that manages portfolios and assets for its clients
Question 8
Which of the following investments is acceptable in an IRA?
A Crude oil futures
B Landscape art
C Shares of a REIT
D Life insurance
CORRECT ANSWER
C Shares of a REIT
On the other hand, art and other collectibles, life insurance, and crude oil futures
contracts are prohibited in an IRA.
(Because they arent Securities)
Question 9
Which of the following actions will require an adviser to register under the USA?
4
@https://www.stuvia.com/user/thestudyvault
