AIF ACCREDITED INVESTMENT FIDUCIARY
TRAINING – DAVID EXAM QUESTIONS AND
CORRECT ANSWERS 2026
AIF ACCREDITED INVESTMENT FIDUCIARY
TRAINING – DAVID EXAM QUESTIONS AND
CORRECT ANSWERS 2026
In the event of litigation, factors a judge will consider when making a
determination of fiduciary status include all the following: - ANSWER: 1.
Number of implementation options
2. Scope of services
3. Sophistication of client
An investment advisor must take discretion of the investment assets in order to
provide comprehensive and continuous investment advice. T or F - ANSWER:
False - An investment advisor need not take discretion in order to provide
comprehensive and continuous investment advice.
Who would normally be considered a fiduciary? - ANSWER: 1. A professional
providing comprehensive and continuous advice
2. Trustee of a private trust
3. Someone with discretion to buy and sell investable assets.
Note: A stock broker/registered representative is not considered a fiduciary
Regulatory Oversight is primarily provided by State Attorney General under which
pieces of legislation - ANSWER: 1. UPIA
2. UPMIFA
3. UMPERSA
Note: Taft-Hartley plans are governed by ERISA, which falls under the oversight
responsibility of the DOL, IRS and PBGC.
,AIF ACCREDITED INVESTMENT FIDUCIARY
TRAINING – DAVID EXAM QUESTIONS AND
CORRECT ANSWERS 2026
Legislation underlying the Practices indicates that U.S. Courts should have access
to investment assets in the event there are egregious violations of fiduciary
responsibility. T or F - ANSWER: True - Practice 1.6 reads, "Clients assets are
protected from theft and embezzlement." Because all of the Practices are
substantiated by legislation, you can infer that the statement is correct.
A fiduciary or co-fiduciary cannot be held responsible for a breach of their
fiduciary responsibility if they can demonstrate they were not aware of a particular
duty or requirement. T or F - ANSWER: F - Ignorance is not a viable defense.
Expected returns are uncertain. Under the normal distribution curve, approximately
95% of the expected returns fall within one standard deviation of the mean. T or F.
- ANSWER: False - Under the normal distribution curve, one standard deviation
encompasses 66% of the sample and two standard deviations encompass 95% of
the sample. Thus , a portfolio with an expected return of 8% and standard deviation
of 17% could be expected to have a return of less than -9% or more than 25% in
approximately 3 years out of 9.
The most widely used estimate of absolute risk is? - ANSWER: Standard
deviation - Alpha and the Sharpe Ratio are measures of risk-adjusted return. Beta
is a measure of market risk. Standard deviation is the most widely accepted
measure of absolute risk.
All of the following are true of the policy portfolio EXCEPT:
1. It relates to asset allocation based upon efficient markets
2. It should always be reflected in the Investment Policy Statement (IPS)
3. Ideally, it is used to model a portfolio that will allow portfolio principal and
returns to meet projected liabilities.
,AIF ACCREDITED INVESTMENT FIDUCIARY
TRAINING – DAVID EXAM QUESTIONS AND
CORRECT ANSWERS 2026
4. It is focused on Alpha - ANSWER: 4. The policy portfolio is contrasted with
the pricing portfolio. The policy portfolio establishes the asset allocation that
should be reflected in all Investment Policy Statements. Ideally, a well crafter
policy portfolio is effective in meeting projected liabilities. The policy portfolio
does not address the possibility that managers can outperform on risk adjusted
return bases; therefore, Alpha is not considered in the policy portfolio. Risk, as
measured by Beta, is a focal point of the policy portfolio. Alpha is the focus of
the pricing portfolio.
All of the following are decisive factors to consider when analyzing the number of
asset classes to include in a portfolio EXCEPT:
1. Portfolio size
2. Investment expertise of decision-makers
3. Existing brokerage platform limitations
4. Ability of decision-makers to properly monitor investments - ANSWER: 3. All
else being equal: the larger the portfolio size, the more asset classes that should
be available; the greater the investment expertise of the decision makers, the
more asset classes that should be available; and lastly, the greater the ability to
monitor the investments, the more assets classes that should be available.
Brokerage platform should not be a deciding factor on the number of asset
classes because if a particular platform cannot accommodate the required asset
classes, it is likely that another platform could. The fiduciary should assure the
platform meets the needs of the participants, rather than fail to meet the
participants' investment needs because of platform limitations
The investment policy statement should be specific enough that a ________ could
implement the plan. - ANSWER: The investment policy statement should be
specific enough that a competent third party could implement the plan. In the event
the investment advisor is unable to perform his or her duties, the IPS must be used
to replicate the process the investment manager was following. An investment
, AIF ACCREDITED INVESTMENT FIDUCIARY
TRAINING – DAVID EXAM QUESTIONS AND
CORRECT ANSWERS 2026
professional, CPA, or Broker implies that a level of professional expertise is
required, which is not the case.
The best way to rebalance a particular asset class is to: - ANSWER: Resampled
efficiency optimization takes into account uncertainty regarding the accuracy of
the input values to the optimizer: asset class expected returns, risks, and
correlations. As a result, the resampled efficiency approach results in more
conservative expected returns for the portfolio as evidenced by a lower efficient
frontier line.
Which of the following is a reason to prepare an investment policy statement:
Select one:
1. Supports the paper trail
2. Provides implementation guidance in estate planning
3. Arguably fulfills the most important function a fiduciary performs
4. All of the above - ANSWER: All of the provided answers are valid reasons for
having an Investment Policy Statement. The IPS supports the paper trail and will
provide documentation for the investment decisions made inside the plan. The
IPS will specify the implementation guidelines for any type of client, including
estate planning. The creation of the IPS is probably the most critical function the
fiduciary performs. Without it, the investment strategy could not be adequately
defined and consistently implemented and monitored.
Practice 2.4 (Selected asset classes are consistent with the client's time horizon and
risk and return objectives) does not apply to participant-directed plans. T or F -
ANSWER: False
Ordinarily, any restriction on an investment program has the potential to reduce the
portfolio's total return and could cause a breach of investment fiduciary
TRAINING – DAVID EXAM QUESTIONS AND
CORRECT ANSWERS 2026
AIF ACCREDITED INVESTMENT FIDUCIARY
TRAINING – DAVID EXAM QUESTIONS AND
CORRECT ANSWERS 2026
In the event of litigation, factors a judge will consider when making a
determination of fiduciary status include all the following: - ANSWER: 1.
Number of implementation options
2. Scope of services
3. Sophistication of client
An investment advisor must take discretion of the investment assets in order to
provide comprehensive and continuous investment advice. T or F - ANSWER:
False - An investment advisor need not take discretion in order to provide
comprehensive and continuous investment advice.
Who would normally be considered a fiduciary? - ANSWER: 1. A professional
providing comprehensive and continuous advice
2. Trustee of a private trust
3. Someone with discretion to buy and sell investable assets.
Note: A stock broker/registered representative is not considered a fiduciary
Regulatory Oversight is primarily provided by State Attorney General under which
pieces of legislation - ANSWER: 1. UPIA
2. UPMIFA
3. UMPERSA
Note: Taft-Hartley plans are governed by ERISA, which falls under the oversight
responsibility of the DOL, IRS and PBGC.
,AIF ACCREDITED INVESTMENT FIDUCIARY
TRAINING – DAVID EXAM QUESTIONS AND
CORRECT ANSWERS 2026
Legislation underlying the Practices indicates that U.S. Courts should have access
to investment assets in the event there are egregious violations of fiduciary
responsibility. T or F - ANSWER: True - Practice 1.6 reads, "Clients assets are
protected from theft and embezzlement." Because all of the Practices are
substantiated by legislation, you can infer that the statement is correct.
A fiduciary or co-fiduciary cannot be held responsible for a breach of their
fiduciary responsibility if they can demonstrate they were not aware of a particular
duty or requirement. T or F - ANSWER: F - Ignorance is not a viable defense.
Expected returns are uncertain. Under the normal distribution curve, approximately
95% of the expected returns fall within one standard deviation of the mean. T or F.
- ANSWER: False - Under the normal distribution curve, one standard deviation
encompasses 66% of the sample and two standard deviations encompass 95% of
the sample. Thus , a portfolio with an expected return of 8% and standard deviation
of 17% could be expected to have a return of less than -9% or more than 25% in
approximately 3 years out of 9.
The most widely used estimate of absolute risk is? - ANSWER: Standard
deviation - Alpha and the Sharpe Ratio are measures of risk-adjusted return. Beta
is a measure of market risk. Standard deviation is the most widely accepted
measure of absolute risk.
All of the following are true of the policy portfolio EXCEPT:
1. It relates to asset allocation based upon efficient markets
2. It should always be reflected in the Investment Policy Statement (IPS)
3. Ideally, it is used to model a portfolio that will allow portfolio principal and
returns to meet projected liabilities.
,AIF ACCREDITED INVESTMENT FIDUCIARY
TRAINING – DAVID EXAM QUESTIONS AND
CORRECT ANSWERS 2026
4. It is focused on Alpha - ANSWER: 4. The policy portfolio is contrasted with
the pricing portfolio. The policy portfolio establishes the asset allocation that
should be reflected in all Investment Policy Statements. Ideally, a well crafter
policy portfolio is effective in meeting projected liabilities. The policy portfolio
does not address the possibility that managers can outperform on risk adjusted
return bases; therefore, Alpha is not considered in the policy portfolio. Risk, as
measured by Beta, is a focal point of the policy portfolio. Alpha is the focus of
the pricing portfolio.
All of the following are decisive factors to consider when analyzing the number of
asset classes to include in a portfolio EXCEPT:
1. Portfolio size
2. Investment expertise of decision-makers
3. Existing brokerage platform limitations
4. Ability of decision-makers to properly monitor investments - ANSWER: 3. All
else being equal: the larger the portfolio size, the more asset classes that should
be available; the greater the investment expertise of the decision makers, the
more asset classes that should be available; and lastly, the greater the ability to
monitor the investments, the more assets classes that should be available.
Brokerage platform should not be a deciding factor on the number of asset
classes because if a particular platform cannot accommodate the required asset
classes, it is likely that another platform could. The fiduciary should assure the
platform meets the needs of the participants, rather than fail to meet the
participants' investment needs because of platform limitations
The investment policy statement should be specific enough that a ________ could
implement the plan. - ANSWER: The investment policy statement should be
specific enough that a competent third party could implement the plan. In the event
the investment advisor is unable to perform his or her duties, the IPS must be used
to replicate the process the investment manager was following. An investment
, AIF ACCREDITED INVESTMENT FIDUCIARY
TRAINING – DAVID EXAM QUESTIONS AND
CORRECT ANSWERS 2026
professional, CPA, or Broker implies that a level of professional expertise is
required, which is not the case.
The best way to rebalance a particular asset class is to: - ANSWER: Resampled
efficiency optimization takes into account uncertainty regarding the accuracy of
the input values to the optimizer: asset class expected returns, risks, and
correlations. As a result, the resampled efficiency approach results in more
conservative expected returns for the portfolio as evidenced by a lower efficient
frontier line.
Which of the following is a reason to prepare an investment policy statement:
Select one:
1. Supports the paper trail
2. Provides implementation guidance in estate planning
3. Arguably fulfills the most important function a fiduciary performs
4. All of the above - ANSWER: All of the provided answers are valid reasons for
having an Investment Policy Statement. The IPS supports the paper trail and will
provide documentation for the investment decisions made inside the plan. The
IPS will specify the implementation guidelines for any type of client, including
estate planning. The creation of the IPS is probably the most critical function the
fiduciary performs. Without it, the investment strategy could not be adequately
defined and consistently implemented and monitored.
Practice 2.4 (Selected asset classes are consistent with the client's time horizon and
risk and return objectives) does not apply to participant-directed plans. T or F -
ANSWER: False
Ordinarily, any restriction on an investment program has the potential to reduce the
portfolio's total return and could cause a breach of investment fiduciary
