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WMCP PRACTICE QUESTIONS WITH CORRECT ANSWERS
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WMCP PRACTICE QUESTIONS WITH CORRECT ANSWERS
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WMCP PRACTICE QUESTIONS WITHCORRECT ANSWERS
A ncchigh-earning nccworker nccwho ncchas nccno nccpension nccin nccretirement nccand ncclittle
ncccurrent nccretirement nccsavings nccwould ncclikely nccearn nccthe ncchighest nccnet nccreturn
nccin nccwhich ncctype nccof nccaccount?
A
tax nccdeferred
B
taxable
C
tax nccexempt
D
money nccmarket ncc- nccAnswerA. nccTax nccdeferred
Calculate nccthe nccnet nccreturn nccon ncc$1,000 nccinvested nccin nccstocks nccwith nccan
nccaverage nccreturn nccof ncc6% nccfor ncc10 nccyears nccin ncca ncctax-deferred nccaccount nccif
nccthe nccmarginal nccincome ncctax nccrate nccat nccthe ncctime nccof nccinvestment nccis ncc20%
nccand nccthe nccmarginal nccincome ncctax nccrate nccat nccthe ncctime nccof nccwithdrawal nccis
ncc25%. ncc(Use nccthe nccnet nccreturn ncctechnique nccin nccwhich nccthe nccpresent nccvalue
nccis nccthe nccamount nccthat ncccould ncchave nccbeen nccinvested nccin ncca ncctaxable
nccaccount.)
A
6.65%
B
2.99%
C
5.32%
D
3.47% ncc- nccAnswerC ncc5.32%
Distributions nccfrom nccthis ncctype nccof nccaccount nccare ncctax nccfree:
A
tax nccexempt
B
401(k)
C
,traditional
D
tax nccdeferred ncc- nccAnswerA. nccTax nccexempt
An nccinvestor nccwho nccprefers ncca nccmore ncccertain nccpayout nccon ncca nccfinancial
nccasset nccis
A
risk-tolerant.
B
risk-averse.
C
risk-seeking.
D
risk-neutral. ncc- nccAnswerb. nccrisk nccadverse
Which nccone nccof nccthe nccfollowing nccis ncca nccreason nccto nccdefer nccclaiming nccSocial
nccSecurity nccuntil nccage ncc70?
A
A nccdivorced nccspouse nccwould ncclike nccto nccmaximize nccthe nccspousal nccbenefit.
B
A nccclient nccwishes nccto nccmaximize nccthe nccretirement nccbenefit nccto ncca nccsurviving
nccspouse.
C
A nccclient nccwishes nccto nccreceive ncc100% nccof ncchis nccprimary nccinsurance nccamount.
D
A nccclient nccwants nccto nccreceive nccbenefits nccas nccsoon nccas nccpossible. ncc-
nccAnswerB. nccA nccclient nccwishes nccto nccmaximize nccthe nccretirement nccbenefit nccto ncca
nccsurviving nccspouse
Which nccof nccthe nccfollowing nccis ncca nccreason nccto ncchold ncca ncclower nccpercentage
nccof nccassets nccin ncccash?
A
high nccilliquidity nccpremium
B
business nccownership
C
highly nccvolatile nccincome
D
lower nccexpected nccreturn ncc- nccAnswerA. ncchigh nccilliquidity nccpremium
Which ncctwo nccof nccthe nccfollowing nccvariable nccannuity nccguaranteed nccliving nccbenefit
nccriders nccprovide ncca ncclifetime nccincome nccbenefit?
A
GMWB nccand nccGMIB nccriders
B
GMAB nccand nccGMIB nccriders
,C
None nccof nccthese ncccombinations
D
GMAB nccand nccGMWB nccriders ncc- nccAnswerA. nccGMWB nccand nccGMIB nccriders
A nccsingle nccpremium nccdeferred nccannuity nccis ncccommonly nccsold nccwith ncca nccmarket
nccvalue nccadjustment nccthat nccincreases nccwhen
A
bond nccprices nccrise.
B
interest nccrates nccincrease.
C
the nccprice nccof ncca nccstock nccindex nccrises.
D
markets nccdecline. ncc- nccAnswerB. nccinterest nccrates nccincrease
A nccratio nccanalysis nccof nccyour nccclient's nccsmall nccbusiness nccfinancial nccstatements
nccshows nccthe nccprofit nccmargin nccdecreasing nccover nccthe ncclast ncc3 nccyears. nccA
nccpossible nccexplanation nccfor nccthis ncctrend ncccould nccbe nccthat
A
a nccmajor ncccustomer nccof nccthe nccclient's nccbusiness ncchas nccbeen nccslowly nccfailing.
B
the nccprimary nccvendor nccfor nccraw nccmaterials nccwas nccunable nccto nccfulfill ncca nccmajor
nccshipment nccearlier nccthis nccyear, ncccausing nccdelays nccin nccproduction.
C
a ncclarge ncccompetitor nccrenegotiated ncclease nccterms nccwith nccits ncclandlord, ncccausing
nccthe nccaverage nccprofit nccmargins nccfor ncccomparable nccbusinesses nccin nccthe nccarea
nccto nccrise nccover nccthe nccpast nccthree nccyears.
D
prices ncchave nccbeen nccrising nccover nccthe nccpast nccthree nccyears. ncc- nccAnswerA. ncca
nccmajor ncccustomer nccof nccthe nccclient's nccbusiness ncchas nccbeen nccslowly nccfailing.
The nccprimary nccpurpose nccof ncca nccfinancial nccintermediary nccis nccto
A
identify ncclenders nccto nccprovide ncccapital nccand nccevaluate nccthe ncccredit nccquality nccof
nccborrowers.
B
collect nccmoney nccfrom nccloans nccand ncclend nccit nccto nccinvestors.
C
securitize nccloans nccand nccsell nccthem nccas nccfinancial nccproducts.
D
lend nccfunds nccto nccbanks nccin nccorder nccto nccprovide ncccapital nccto nccborrowers. ncc-
nccAnswerA. nccidentify ncclenders nccto nccprovide ncccapital nccand nccevaluate nccthe
ncccredit nccquality nccof nccborrowers.
, An nccinvestoris nccconsidering nccusing ncceither ncca ncccoupon nccbond nccor ncca ncczero-
coupon nccbond nccto nccfund ncca ncclarge nccmortgage nccpayment nccthat nccis nccdue nccin
ncc10 nccyears.The nccinvestor nccwants nccto nccmake nccsure nccthe nccbond nccpays nccthe
nccexact nccamount nccneeded nccto nccmake nccthe nccpayment.You nccrecommend ncca
ncczero-coupon nccbond nccbecause
A
it ncchas nccno nccreinvestment nccrisk.
B
it nccwill nccfluctuate nccless nccin nccvalue nccover ncctime.
C
it ncchas ncczero nccchance nccof nccdefault.
D
it nccwill nccprovide ncca ncchigher nccnet nccreturn. ncc- nccAnswerA. ncchas nccno
nccreinvestment nccrisk.
If ncca nccbond nccwith ncca ncc$1,000 nccpar nccvalue nccis nccissued nccwith ncca ncc$20
ncccoupon nccpaid nccsemi-annually, nccthe ncccurrent nccyield nccon nccthe nccbond nccif nccthe
nccprice ncctoday nccis ncc$800 nccis
A
5%.
B
4%.
C
2.50%.
D
3%. ncc- nccAnswerA. ncc5%
When nccthere nccis ncca nccpartial nccsurrender nccof ncca nccuniversal ncclife nccpolicy, nccthe
nccpolicy nccholder nccwould nccbenefit nccfrom ncca nccreduction nccin nccthe nccface nccamount
nccbecause nccthis nccreduction
A
prevents nccthe nccpolicy nccfrom nccbecoming ncca nccmodified nccendowment ncccontract.
B
lowers nccthe nccchance nccthe nccpolicy nccwill ncclapse nccwithout nccvalue nccby ncckeeping
nccthe nccnet nccamount nccat nccrisk nccthe nccsame.
C
increases nccthe nccamount nccof nccinterest ncccredited nccon nccthe nccpolicy.
D
None nccof nccthe nccabove. ncc- nccAnswerb. ncclowers nccthe nccchance nccthe nccpolicy nccwill
ncclapse nccwithout nccvalue nccby ncckeeping nccthe nccnet nccamount nccat nccrisk nccthe
nccsame.
A nccpolicy nccowner nccof ncca ncclife nccinsurance nccpolicy nccneeds nccsome ncccash nccfor
nccpersonal nccexpenses, nccbut nccstill nccneeds nccto nccprovide nccfamily nccmembers nccwith
ncca nccsubstantial nccdeath nccbenefit. nccThe ncctransaction nccthat nccwould nccbe nccmost
nccsuitable nccfor nccthe nccpolicy nccowner's nccobjectives nccis
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