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Exam (elaborations)

AWMA Exam 3 Questions & 100% Correct Answers

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The top three specialty areas in which high net worth individuals seek advice include all of the following except A)retirement planning. B)tax planning. C)estate planning. D)investment planning. ~~> A) The top three specialty areas in which high net worth individuals seek advice are t...

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  • September 12, 2024
  • 54
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • AWMA
  • AWMA
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1 | P a g e | © copyright 2024/2025 | Grade A+




AWMA Exam 3 Questions & 100% Correct
Answers
The top three specialty areas in which high net worth individuals seek advice

include all of the following except




A)retirement planning.

B)tax planning.

C)estate planning.

D)investment planning.

✓ ~~> A) The top three specialty areas in which high net worth

individuals seek advice are tax, estate, and investment planning.

Retirement planning is not as necessary, but may be a minor concern.

Mod 1




Concerning behavioral biases and as compared to the mass affluent, high

net worth individuals have




A) more money-avoidance beliefs.

B)less of a tendency for loss aversion.

C)fewer money status beliefs.



Master01 | September, 2024/2025 | Latest update

, 2 | P a g e | © copyright 2024/2025 | Grade A+



D)more external locus of control.

✓ ~~> B) The wealthy are more likely than other investors to have a

positive view about money. As compared to the mass affluent (with

more money biases and some found to be earning less as a result), the

high net worth individuals were found to have fewer money-avoidance

beliefs, more money-status beliefs, a more internal locus of control, less

of a tendency for loss aversion, and significantly more attribution of

their financial success to two factors: a drive to increase their wealth

and a commitment to follow their passions. Mod 1




In the wealth allocation framework, the liquid asset allocation would most

likely include which one of the following assets?




A)Dividend stocks

B)Preferred stocks

C)Managed global bonds

D)Annuities

✓ ~~> D) This part of the portfolio contains forms of insurance, such as

insurance, home mortgage, annuities, hedging, direct gold, and cash

and cash equivalents. Mod 1




Master01 | September, 2024/2025 | Latest update

, 3 | P a g e | © copyright 2024/2025 | Grade A+



In the wealth allocation framework, the risky asset allocation would most likely

include




A) investment real estate.

B)hedges.

C)large-cap ETFs.

D)balanced mutual funds.

✓ ~~> A) Risky assets can include many different vehicles, such as

investment real estate, a small business, concentrated stock and stock

options, global small company stocks, some commodities, aggressive

inflation protectors, and out of the money calls/puts on currencies or

bonds. Mod 1




In the wealth allocation framework, the main diversified asset allocation

would most likely include




A)annuities.

B)hedges.

C)managed global bonds.

D)home mortgage




Master01 | September, 2024/2025 | Latest update

, 4 | P a g e | © copyright 2024/2025 | Grade A+



✓ ~~> C) The main diversified assets category, the largest portion of the

portfolio, is still relatively low risk; it can contain managed income

investments like dividend stocks, preferred stocks, own company stock

(unless risky), and managed global bonds. Mod 1




Concerning the wealth allocation framework, which one of the following

portfolio structures is best recommended for a risk averse high net worth

investor?




A)20% liquid assets/75% main diversified assets/5% risky assets

B)30% liquid assets/50% main diversified assets/20% risky assets

C)25% liquid assets/60% main diversified assets/15% risky assets

D)45% liquid assets/50% main diversified assets/5% risky assets

✓ ~~> D) In the wealth allocation framework, risky investments for a risk

averse high net worth investor are recommended to be only 5% to 10%

of the portfolio. A minimum of 20% of liquid assets is recommended for

the portfolio allocations of all risk levels. The main portfolio should be

only 40%-70% of total assets. Mod 1




In the wealth allocation framework, human capital is in which one of the

following portfolio "buckets"?




Master01 | September, 2024/2025 | Latest update

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