AWMA Exam Questions With Correct
Answers
Intestate - answerDying without a will. The distribution of their assets will be determined by
a probate court.
1031 Exchange - answerA swap of one real estate investment property for another that
allows capital gains taxes to be deferred. The term—wh...
Intestate - answer✔✔Dying without a will. The distribution of their assets will be determined by
a probate court.
1031 Exchange - answer✔✔A swap of one real estate investment property for another that
allows capital gains taxes to be deferred. The term—which gets its name from Section 1031 of
the Internal Revenue Code (IRC)—is bandied about by real estate agents, title companies,
investors, and more. Some people even insist on making it into a verb, as in, "Let's 1031 that
building for another."
Emotional Intelligence - answer✔✔The ability to perceive and control one's own emotions and
use those emotions to guide thought and behavior.
Emotional Perception - answer✔✔The ability to notice and accurately express emotions.
Ex: A client has been angry at his meetings w/his adviser. The client realizes his anger stems
from his work and is lashing out at his adviser's financial suggestions.
Emotional Facilitation - answer✔✔Describes how individuals use emotions to assist thinking,
including responding to changes in their environment and in themselves.
Ex: A client tells her planner that she prefers afternoon meetings at the planner's office. She's
aware that she'll be in a BETTER MOOD and away from distractions.
Emotional Understanding - answer✔✔Understanding and analyzing emotions or employing
emotional knowledge.
Emotional Regulation - answer✔✔Regulation of emotions to promote emotional and intellectual
growth. Openness and understanding of feelings permit the individual to learn to control their
feelings and dictate expression when appropriate.
Total Risk - answer✔✔The combination of systematic risk and unsystematic risk. It is measured
by the standard deviation (variability).
Systematic Risk - answer✔✔The uncertainty of return inherent in the "system" of which any
asset is a part. Found in nearly all securities because comparable securities generally move
together in a systematic manner. It is non-diversifiable.
- Purchasing power risk
- Reinvestment risk
- Interest rate risk
- Market risk
- Exchange rate risk
Purchasing Power (Inflation) Risk - answer✔✔The risk of one's purchasing power decreasing as
a result of an increase in inflation. Inflation is most devastating to bond prices since the interest
and principal are usually fixed in terms of dollar amounts. Increase inflation will send bond
prices downward.
Inflation rate is pro-cyclical (moving in the same direction as the economy as a whole) but will
lag by a year or more.
Reinvestment Risk - answer✔✔The risk that market interest rates have decreased at the time
payments from an investment are received. An investor is forced to reinvest his payment amount
at a time when rates are not as favorable as they may have been previously.
Market Risk - answer✔✔This risk stems from factors independent of any particular security.
Factors include political events, broad economic and social changes, and the mood of the
investing public.
It is systemic in the sense that the price of any security can rise or fall in reaction to these larger
company's financial condition.
Exchange Rate Risk (Currency Risk) - answer✔✔This risk occurs as the value of foreign
currencies fluctuate against the U.S. dollar. If the foreign currency strengthens, the return is
positive. If the foreign currency weakens, the return is negative.
Exogenous Risk - answer✔✔Risks found outside the financial system and is taken into account
when doing fundamental analysis.
Endogenous Risk - answer✔✔Risk found within the financial system itself. This type of risk can
be the most dangerous and is often overlooked or not taken seriously enough by advisers and
financial planners.
Unsystematic Risk - answer✔✔A risk that affects at most a small number of assets. Also, unique
or asset-specific risk. Can be reduced through diversification.
- Business risk
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Brightstars. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.49. You're not tied to anything after your purchase.
