AWMA Module 8 Quiz Questions and Correct Detailed Answers with Rationales (Verified Answers) Already Graded A+
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AWMA Module 8 Quiz Questions and Correct Detailed Answers with Rationales (Verified Answers) Already Graded A+
Which is the most important area of concern that was addressed in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010?
A)
Fiduciary standard
B)
Hedge fund regulation...
AWMA Module 8 Quiz Questions and
Correct Detailed Answers with
Rationales (Verified Answers) Already
Graded A+
Which is the most important area of concern that was addressed in the Dodd-Frank
Wall Street Reform and Consumer Protection Act of 2010?
A)
Fiduciary standard
B)
Hedge fund regulation
C)
Systemic risk
D)
Derivatives trading - Answer ✔ C)
Systemic risk
Concern over systemic risk and the need to maintain a stable financial system is the
primary issue that Dodd-Frank addressed. The financial system itself almost came to a
grinding halt in 2008. Derivatives did contribute to the crisis, but the crisis spread well
beyond the derivatives market into areas that no one expected, such as the commercial
paper market. Hedge fund regulation was addressed but was not the most important
area of concern. Dodd-Frank asked the SEC to look into a uniform fiduciary standard for
both broker-dealers and investment advisers.
Which two primary fiduciary duties are required of both registered investment advisers
under recent SEC guidance and CFP® professionals in their Standards of Conduct?
A)
Disclosure and care
B)
Care and loyalty
C)
Loyalty and following client instructions
D)
Loyalty and disclosure - Answer ✔ B)
Care and loyalty
, SEC release IA-5248 and the CFP Board Standards of Conduct both explicitly require
the fiduciary duties of loyalty and care. Disclosure is an important part of these duties in
order to look out for the best interest of the client. The duty to follow client instructions is
one of the three fiduciary duties, along with loyalty and care, found in the CFP Board
Standards.
Which statement regarding the fiduciary standard is correct?
A)
The fiduciary standard and the suitability standard are essentially the same standard
when it comes to looking out for the client's best interests.
B)
The fiduciary standard is considered a higher standard than the suitability standard.
C)
The fiduciary standard is applied equally and consistently for all financial advisers.
D)
The fiduciary standard would never apply to an insurance agent. - Answer ✔ B)
The fiduciary standard is considered a higher standard than the suitability stand
Explanation
The fiduciary standard is a higher standard than that required under the suitability
standard. For example, the duty of loyalty is required of fiduciaries when working with
clients, and this duty is not required under the suitability standard.
What is the primary function of central clearing counterparties (CCPs) that have been
set up as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act
of 2010?
A)
To allow government oversight
B)
To regulate hedge fund transactions
C)
To eliminate counterparty risk
D)
To facilitate the netting of swap contracts - Answer ✔ D)
To facilitate the netting of swap contracts
Explanation
CCPs facilitate the netting of swap contracts in order to reduce systematic risk.
The SEC commissioned a RAND study, which found that there was a great deal of
confusion for investors as far as understanding the differences between
A)
captive insurance agents and brokers.
B)
insurance agents and broker-dealers.
C)
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