AWMA EXAM ACTUAL ACTUAL QUESTIONS

AWMA EXAM ACTUAL (ACTUAL / ) QUESTIONS

AND VERIFIED ANSWERS GRADED A+

Which one of the following characteristics is more correct concerning younger wealthy individuals (millennials and GenXers)?

• Younger wealthy individuals are seeking more technological

options in financial planning.

• Younger wealthy individuals have not experienced significant bear

markets.

• Younger wealthy individuals have directly opposite financial

needs as compared to baby boomers.

• Younger wealthy individuals likely want to be advised by one of

their own generation.

• Younger wealthy investors (millennials and GenXers) are seeking

fresh approaches to financial planning, including more technological options. In addition, young clients also have been through fewer years of investing but have experienced several significant bear markets.Mod 1

George's bonds fell in price on news of higher interest rates. To which one of the following risks are George's bonds most likely to be subject?

A)Financial risk B)Reinvestment risk C)Interest rate ris 1 / 4

• Default risk
• Interest rate risk centers on the inverse relationship of interest rate

changes and bond prices, so, in this situation, if interest rates go up, the price of George's bonds go down. Mod2

According to the Barnewall study, which one of the following would be a likely candidate for complex and risky investment opportunities?

A)Corporate executives B)Individuals with inherited wealth C)Surgeons (medical and dental) D)Non-surgeons (medical and dental)

• Medical and dental surgeons fall into what Barnewall described as

"active investors" who are measurably less risk averse. The category also includes small business owners who started their business, independent CPAs and lawyers, and entrepreneurs. Mod2

Which of the following are characteristics of the Sharpe ratio?

• It adjusts the return for variability by using standard deviation as the

measure of risk.II. It assumes that the portfolio being evaluated is well diversified.III. Both alpha and beta appear in the ratio formula.IV. It indicates by how much the realized return differs from the return required by the capital asset pricing model. 2 / 4

• III and IV
• I and II
• I only

D I, II, and IV

• Options II, III, and IV are true of Jensen's alpha; option II is true of

the Treynor ratio. Mod2

Bill is highly confident, strong willed, and difficult to advise. Which one of the following best describes Bill's investor personality?

A)Guardian B)Celebrity C)Individualist D)Adventurer

• An adventurer is impetuous, confident, strong willed, and difficult

to advise. Mod2

Assume a growth stock mutual fund has a beta of 1.3. If the stock market increases by 9%, you would expect this mutual fund to

• decrease by 9%.

B)increase by 9%.C)increase by 11.7%. 3 / 4

D)decrease by 11.7%.

• You would expect any fund with a beta of 1.3 to increase by

11.7% (1.3 × 9%). Mod2

The risk-free rate is 1.25%, the market rate of return is 8%, the standard deviation of XYZ stock is 20, and the beta of XYZ stock is

1.10. Using the capital asset pricing model in conjunction with this

information, what is the expected return of XYZ stock?

A)8.68%

B)12.2%

C)12.1%

D)7.7%

• CAPM is the risk-free rate plus beta times excess return, or Rs =

1.25% + (8% − 1.25%) 1.1 = 8.68%.

Which one of the following lists the investments in order of least risk to most risk?

• High-grade municipal bonds, high-grade preferred stock, limited

partnerships, growth mutual funds B)Money market accounts, puts and calls, high-grade convertibles, future contracts C)Treasury securities, high-grade convertibles, REITs, collectibles

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