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AWWA PRACTICE EXAM QUESTIONS AND ANSWERS
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AWWA PRACTICE EXAM QUESTIONS ANDANSWERS
Baby boomers and older GenXers versus millennials and younger Gen Xers-
-Are likely to receive advice from a millennial adviser.
-Have financial planning demands that have remained reasonably consistent over
many years.
-Have not had significant bear markets.
-Are generally seeking many more technical choices in financial planning -
ANSWER Have financial planning demands that have remained pretty constant
over many years
Dan's bonds mature in two weeks. Since he purchased the bonds, interest rates have
plummeted. Which of these threats are most likely to affect Dan's bonds?
-Financial Risk
Default risk
-Reinvestment rate risk
-Risk of interest rate reinvestment
The link between investment strategy and investment policy is such that
-Investment strategy is subject to investment policy.
Investment policy is governed by investment strategy.
-The investment strategy determines which asset types should be included in the
investment policy.
,-An investment policy is developed when the investment techniques to be
implemented have been decided upon.
Investment strategy is subservient to investment policy. - ANSWER
If ABC Corporation has net earnings of $100,000 and pays out $50,000 in
dividends. What is the taxable income?
-$50,000
-$0
-$100,000
-$25,000 - ANSWER $100,000
Joseph, age 60, is a taxpayer with a large amount of income that is not subject to
withholding. He has not made any expected payments this year. During a planned
review session in mid-December, his adviser informs him that he is about $25,000
underwithheld. What course of action may Joseph take to avoid an underpayment
penalty?
-Submit an expected tax payment before the end of the year. This compensates for
any under withholding.
-Take a $25,000 payment from his IRA account and request that 100% of it be
withheld for federal income tax before the end of the year. This compensates for
any under withholding.
-Make an estimated tax payment in December and another before the January 15
deadline for the fourth quarter. This compensates for any under withholding.
-No exemptions from the underpayment penalty are available. - ANSWER: Make a
$25,000 payout from his IRA account and order that 100% of it be withheld for
federal income tax before the end of the year. This compensates for any under
withholding.
,Which of the following statements truly describes the features of using life
insurance to fund an informal nonqualified deferred compensation plan?
It symbolizes an asset that can be purchased to cover the employer's unsecured
commitment to pay deferred wages to the employee.
It has the advantage of being able to fund a death benefit instantly.
It provides the advantage of several settlement choices.
It simplifies administration by paying death proceeds directly to an employee's
surviving spouse or other beneficiary.
-II and IV
-I and II
-I, II and III
-I and III - ANSWER I, II, AND III
Which sentence best describes the illegal practice of law?
-A non-attorney who consults with a professional attorney about whether
provisions in their client's will are required.
-A non-attorney who encourages a client to update their estate plan.
-A non-attorney who informs a client of potential "red flags" in their estate plan.
-A non-attorney who encourages a client to take acts that will harm their property
or legal rights.
, All of these changes have occurred when investment businesses switched from
private partnerships to publicly traded entities, with the exception of
Partners no longer share in the firm's revenues and losses.
-Risk-taking has grown.
-there is more individual accountability.
Profits can be privatized (bonuses) while losses are socialized (bailouts). -
ANSWER: There is greater individual accountability.
The primary declared life objective of affluent folks is
-Providing a secure retirement lifestyle.
-remaining in good health.
-Protecting riches.
-Leaving an estate to heirs. - ANSWER: Maintaining good health.
Wilson has a $20,000 portfolio that includes four different equities. The
distribution of this capital and the betas of these stocks are depicted below.
% of Portfolio Value Beta
Stock A: 10% 1.1
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