Quiz_________________?
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
Quiz_________________?
Define Fiduciary -
Answer✅
A fiduciary is someone who: manages property for the benefit of another; exercises
discretionary authority or control over assets; and/or acts in a professional capacity of trust
and renders comprehensive and continuous investment advice. FYI - A custodian does not
perform any of these roles
Quiz_________________?
What are the reasons to revisit service agreements at least every 3 years? -
Answer✅
1. Vendor's product offering may have expanded
1
,2. Fees may be reduced
3. Scope of require services may have expanded
The is best practice, not an ERISA (fiduciary) requirement
Quiz_________________?
What are the benefits of a CEFEX assessment? -
Answer✅
1. It provides a "checklist" approach, which imparts a discipline and rigor to an investment
decision-making process
2. It may help to educate fiduciaries of their role and responsibilities
3. It leads to the recognition and correction of shortfalls to current investment practices,
which may reduce liability.
Note: it is not designed as a fault-finding exercise
Quiz_________________?
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.
Quiz_________________?
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
Quiz_________________?
2
,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.
Quiz_________________?
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.
Quiz_________________?
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.
Quiz_________________?
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
3
, 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.
Quiz_________________?
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.
Quiz_________________?
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.
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.
Quiz_________________?
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 -
4
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
Quiz_________________?
Define Fiduciary -
Answer✅
A fiduciary is someone who: manages property for the benefit of another; exercises
discretionary authority or control over assets; and/or acts in a professional capacity of trust
and renders comprehensive and continuous investment advice. FYI - A custodian does not
perform any of these roles
Quiz_________________?
What are the reasons to revisit service agreements at least every 3 years? -
Answer✅
1. Vendor's product offering may have expanded
1
,2. Fees may be reduced
3. Scope of require services may have expanded
The is best practice, not an ERISA (fiduciary) requirement
Quiz_________________?
What are the benefits of a CEFEX assessment? -
Answer✅
1. It provides a "checklist" approach, which imparts a discipline and rigor to an investment
decision-making process
2. It may help to educate fiduciaries of their role and responsibilities
3. It leads to the recognition and correction of shortfalls to current investment practices,
which may reduce liability.
Note: it is not designed as a fault-finding exercise
Quiz_________________?
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.
Quiz_________________?
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
Quiz_________________?
2
,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.
Quiz_________________?
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.
Quiz_________________?
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.
Quiz_________________?
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
3
, 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.
Quiz_________________?
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.
Quiz_________________?
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.
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.
Quiz_________________?
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 -
4
