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Question 1 of 30
1. Question
Banks have concentrated largely on taking ownership of the wealth base of their customers, with their marketing policies shifted in that direction. Brokers were especially involved in trading commissions, which is strategically more relevant than the direct commission-generating sector. A main question facing brokerages in this regard concerns business prospects for:
Correct
In this context, a crucial issue that brokerages are facing involves business incentives for recommendation dispensing, and further trading following these guidance.
Incorrect
In this context, a crucial issue that brokerages are facing involves business incentives for recommendation dispensing, and further trading following these guidance.
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Question 2 of 30
2. Question
When for the competitiveness of a commercial bank or investment fund, senior management can never lose sight of the fact that fee income is by no means associated with net profit. Once upon a time there was a period when expenses associated with wealth management and trust operations were mainly payroll expenses, a significant majority of which was officer administrative period. This is no longer valid because there have been other costs in the image. Choose the incorrect option.
Correct
Once upon a time there was a period when expenses associated with wealth management and trust operations were mainly payroll expenses, a significant majority of which was officer administrative period. That is no longer so because other expenses have joined the information technology picture, messaging, fees charged to suppliers of content, and overheads.
Incorrect
Once upon a time there was a period when expenses associated with wealth management and trust operations were mainly payroll expenses, a significant majority of which was officer administrative period. That is no longer so because other expenses have joined the information technology picture, messaging, fees charged to suppliers of content, and overheads.
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Question 3 of 30
3. Question
Essentially, given that the cost of operation has been calculated and that each private banking account has the overall cost of operation correctly allocated to it, the management of the company is best positioned to be in charge of P&L, the income center of the organization and the whole business line. For evaluating their contribution to the bottom line of the private banking company, consumer accounts may be further classified according to:
Correct
According to Number of Funds Type of portfolio Operation Portfolio Predominant asset composition, and Number of liability borne by the bank or broker, customer accounts can be further listed for determining their contribution to the bottom line of the private banking organization.
Incorrect
According to Number of Funds Type of portfolio Operation Portfolio Predominant asset composition, and Number of liability borne by the bank or broker, customer accounts can be further listed for determining their contribution to the bottom line of the private banking organization.
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Question 4 of 30
4. Question
Approximately one-quarter of financial managers in the US work solely for company commissions.Just another fifth of contract jobs, and about 40% mix payments and commissions. For the remaining 5 per cent collect a salary and the remainder receive a mix for salaries and commissions. Each of the above main requirements requires incentive prizes. What of the following choices isn’t correct?
Correct
Bonus awards provide one of the following key criteria: Relative fund results relative to a benchmark Real fund performance in terms of total gains External appraisal by peers and subordinates Total investment firm competitiveness, and Inflow of additional financial capital from pleased clients.
Incorrect
Bonus awards provide one of the following key criteria: Relative fund results relative to a benchmark Real fund performance in terms of total gains External appraisal by peers and subordinates Total investment firm competitiveness, and Inflow of additional financial capital from pleased clients.
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Question 5 of 30
5. Question
With the payment system, the sums received by investment consultants and executives by carrying out various activities and selling specific goods can vary greatly. In fact, there is ample evidence that opportunities for remuneration and other monitoring mechanisms implemented by investment companies affect investment decisions of the portfolio managers to a relatively significant degree. These causes include:
Correct
There is ample evidence that opportunities for remuneration and other monitoring mechanisms implemented by investment companies influence the investment decisions of portfolio managers to a relatively significant degree. This influence includes market risk, and eventually legal risk.
Incorrect
There is ample evidence that opportunities for remuneration and other monitoring mechanisms implemented by investment companies influence the investment decisions of portfolio managers to a relatively significant degree. This influence includes market risk, and eventually legal risk.
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Question 6 of 30
6. Question
The legislation prescribes that fund managers “administer the private banking accounts and trust with the patience of a prudent business individual” in virtually all countries. Yet it’s not easy to put human nature behind, for example, when it comes to shares, and payments and commissions arising from them:
Correct
When it comes to savings, and their payments and commissions, leaving human nature aside, for example, is not easy for Portfolio managers to have interests, and incentive systems influence investing decisions.
Incorrect
When it comes to savings, and their payments and commissions, leaving human nature aside, for example, is not easy for Portfolio managers to have interests, and incentive systems influence investing decisions.
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Question 7 of 30
7. Question
McDonough quoted the divine admonition to ‘love your neighbor as yourself’ as reason for voluntary CEO salary cuts, starting with the largest businesses, according to The Wall Street Journal. He said: ‘CEOs and their boards should clearly agree that executive compensation is unfair, and change it to rates that are more rational and justifiable.The Milwaukee Journal-Sentinel, affirming McDonough’s remarks, editorialized that controlling executive pay is, or should be, the responsibility of corporate boards. Unfortunately, too many executive executives on client management boards actually make the CEO’s rubber-stamp decisions, and this results in:
Correct
Too many executive executives on business management boards simply rubber stamp decisions taken by the CEO, and this leads to Excessive top pay, and Extravagant stock options.
Incorrect
Too many executive executives on business management boards simply rubber stamp decisions taken by the CEO, and this leads to Excessive top pay, and Extravagant stock options.
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Question 8 of 30
8. Question
The term ‘algorithm’ is generally used to describe a computation method which will lead to:
Correct
The word ‘algorithm’ is used to describe a computation method leading from variable input data to results calculated by a step-by-step procedure defined in mathematics.
Incorrect
The word ‘algorithm’ is used to describe a computation method leading from variable input data to results calculated by a step-by-step procedure defined in mathematics.
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Question 9 of 30
9. Question
Heuristic methods are often used in modeling, and are based on a specific structure. One simple way to explain them is that they are distinguished by trial and error, thereby reflecting the manner in which the human mind frequently operates in complicated trials as well as decision taking. Thus heuristics are particularly useful in:
Correct
Heuristic methods are also used in modeling, which are based on another basis. In Fairly ambiguous and Fuzzy problem areas, heuristics are especially useful.
Incorrect
Heuristic methods are also used in modeling, which are based on another basis. In Fairly ambiguous and Fuzzy problem areas, heuristics are especially useful.
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Question 10 of 30
10. Question
What do institutional investors and all other stakeholders consider when designing and using simulators, private bankers?
Correct
When designing and using simulators, private banks, institutional investors and all other stakeholders will note that: precision is more critical than consistency, and 80% of the problem is related to the database; the model is only 20%.
Incorrect
When designing and using simulators, private banks, institutional investors and all other stakeholders will note that: precision is more critical than consistency, and 80% of the problem is related to the database; the model is only 20%.
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Question 11 of 30
11. Question
Provided that the information elements (IEs) in the archive are correctly maintained and accurate, a crucial determination to be taken when testing on investment results is whether existing IEs should be assigned equal weight, or whether new ones should be weighted more than the old ones. This can be achieved by reducing the relative value of previous IEs, so:
Correct
This can be achieved by reducing the relative value of previous information elements (IEs), so that there is a larger weight for the more recent ones.
But past data are still in the image, at the same time.Incorrect
This can be achieved by reducing the relative value of previous information elements (IEs), so that there is a larger weight for the more recent ones.
But past data are still in the image, at the same time. -
Question 12 of 30
12. Question
Lehman Brothers, the investment bank, developed a plan that threatened portfolio ventures by prices over a wide range of measurable risk sensitivities during the next month. The above are taken as elements of the standard portfolio. This then maps these sensitivities into an approximate variance in return. Observable apps include 100 variables which include:
Correct
Observable features are consistent with 100 indicators, including: spread of interest rate exposures along the yield curve, allocation of portfolios to business segments and credit values, and a variety of mortgage variables, and callable or putable securities.
Incorrect
Observable features are consistent with 100 indicators, including: spread of interest rate exposures along the yield curve, allocation of portfolios to business segments and credit values, and a variety of mortgage variables, and callable or putable securities.
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Question 13 of 30
13. Question
Brand name risk in relation to private banking and wealth management is especially important. This is basically reputational harm (see Chapters 1 and 2) that comes from the fact that the law is being violated by someone intentionally, or by accident. For eg, the executive in charge of Crédit Suisse’s activities in India sold short securities. There is nothing wrong in selling short in the USA, and much of Europe, but it’s punishable in India. What does this explanation show?
Correct
This example demonstrates: globalization takes immense cultural and legislative disparities to the forefront.
These procedural, political, and cultural gaps in financial markets, in addition, make enforcement even more difficult.Incorrect
This example demonstrates: globalization takes immense cultural and legislative disparities to the forefront.
These procedural, political, and cultural gaps in financial markets, in addition, make enforcement even more difficult. -
Question 14 of 30
14. Question
The right approach for private finance, wealth management and elsewhere is not to demand that:
Correct
With respect to private banking, wealth management and elsewhere, the safest approach is to ensure that: family members work well elsewhere before applying, and that they face as stringent an assessment as any newcomer before being taken on.
Incorrect
With respect to private banking, wealth management and elsewhere, the safest approach is to ensure that: family members work well elsewhere before applying, and that they face as stringent an assessment as any newcomer before being taken on.
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Question 15 of 30
15. Question
What is Jos Wieleman of ABN-Amro advising to resolve the strategic gap which affects business risk?
Correct
Jos Wieleman of ABN-Amro advises to address the structural divide concerning market risk: take the proverbial long, hard look in corporate management, and moving past the traditional, short one-year preparation cycle.
Incorrect
Jos Wieleman of ABN-Amro advises to address the structural divide concerning market risk: take the proverbial long, hard look in corporate management, and moving past the traditional, short one-year preparation cycle.
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Question 16 of 30
16. Question
It is not only investors but institutions who have to take risks. Despite the plethora of legislation and social obligations to which the banking industry is subject, a financial company or asset management organization is, after all, a corporation that needs to take risks to:
Correct
Despite the multitude of legislation and societal obligations that the banking sector is subject to, a financial company or asset management organization is, after all, a corporation that will take risks to: broaden its possibilities and make money for its stakeholders.
Incorrect
Despite the multitude of legislation and societal obligations that the banking sector is subject to, a financial company or asset management organization is, after all, a corporation that will take risks to: broaden its possibilities and make money for its stakeholders.
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Question 17 of 30
17. Question
Investors, banks and investment managers will understand that with the pace of transition increasing, and a networked world economy generating possibilities of unparalleled magnitude, the expected exposure(s) also rises. Which new considerations are at stake?
Correct
Enhanced vulnerability is often expected when emerging entrants threaten mainline companies, outdated existing risk management structures and recently introduced policies and procedures to mitigate risk.
Incorrect
Enhanced vulnerability is often expected when emerging entrants threaten mainline companies, outdated existing risk management structures and recently introduced policies and procedures to mitigate risk.
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Question 18 of 30
18. Question
Business practices of any businessman, private banker, or fund manager subject him or her to different forms of risks. Risk identification is also important. Choose the wrong Risk Management Move.
Correct
Managing risk starts with the definition that an individual, or an agency, assumes the fundamental essence of exposure(s). Reviewing historical and current risks, predicting possible future outcomes, developing risk management procedures, and evaluating risk-related factors due to industry movements, credit risk patterns, and regulatory adjustments.
Incorrect
Managing risk starts with the definition that an individual, or an agency, assumes the fundamental essence of exposure(s). Reviewing historical and current risks, predicting possible future outcomes, developing risk management procedures, and evaluating risk-related factors due to industry movements, credit risk patterns, and regulatory adjustments.
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Question 19 of 30
19. Question
As a concept, credit risk is often used in conjunction with the valuation of collateral retained to protect the commitments of the counterparty, if such collateral happens to be inadequate.
Direct exposure to credit risk cannot result, in general, from:Correct
Overall, direct exposure to credit risk can result from: lending practices, investment decisions, trading operations, the role of broker in financial contracts, and all other forms of holding portfolio positions.
Incorrect
Overall, direct exposure to credit risk can result from: lending practices, investment decisions, trading operations, the role of broker in financial contracts, and all other forms of holding portfolio positions.
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Question 20 of 30
20. Question
When working with creditworthy counterparties the optimal approach to handle credit risk is. No one would complain with it because it’s not a realistic proposition. What might be the realistic solution from the following?
Correct
The realistic solution is: tracking net exposure to individual counterparties, complying on a regular basis with defined credit limits, securing collateral where necessary, and continuously determining the valuation of this collateral.
Incorrect
The realistic solution is: tracking net exposure to individual counterparties, complying on a regular basis with defined credit limits, securing collateral where necessary, and continuously determining the valuation of this collateral.
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Question 21 of 30
21. Question
The credit risk problem for the capital markets is much larger than those figures suggest. GM has more than $300 billion in outstanding debt. Not only did premiums on their bonds increase dramatically following the launch, but there was also the possibility of a financial crisis on the debt securities industry, as the rating agencies cut GM’s ranking to junk status. Crucial factors are:
Correct
Crucial factors include: whether the company’s cash flow increased, and whether the profit margins increased on the existing level on its latest range of trucks and sport utility vehicles.
Incorrect
Crucial factors include: whether the company’s cash flow increased, and whether the profit margins increased on the existing level on its latest range of trucks and sport utility vehicles.
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Question 22 of 30
22. Question
Part and parcel of constant diligence is a regular evaluation of credit ratings ‘integrity, representing a counterparty’s credit quality.1 This is an important aspect of the risk-driven credit-management cycle. Executives of the bank or fund manager will periodically check the condition of the portfolio, excluding:
Correct
Executives of the bank or fund manager will monitor the condition of investments annually, including: ratios, late payments, non-performing loans, defaults of loans and recoveries.
Incorrect
Executives of the bank or fund manager will monitor the condition of investments annually, including: ratios, late payments, non-performing loans, defaults of loans and recoveries.
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Question 23 of 30
23. Question
Companies have a number of methods of tracking their competition risk profile, excluding a check over:
Correct
Both financial and industrial activities are subject to market risk, which (as we saw briefly in the Introduction) reflects a potential shift in the valuation of financial instruments. This is triggered by negative shifts in interest rates, oil values, other asset costs, foreign currency exchange rates and other market factors (to the investor). Companies have a range of ways to track their market risk profile, by always updating their strategies: shares, risks, portfolios, and selling.
Incorrect
Both financial and industrial activities are subject to market risk, which (as we saw briefly in the Introduction) reflects a potential shift in the valuation of financial instruments. This is triggered by negative shifts in interest rates, oil values, other asset costs, foreign currency exchange rates and other market factors (to the investor). Companies have a range of ways to track their market risk profile, by always updating their strategies: shares, risks, portfolios, and selling.
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Question 24 of 30
24. Question
Any businesses quantify market risk through models, based on calculating vulnerability to risks by sensitivity testing. Such findings are related to the defined guidelines, with exceptions that are subject to senior management review and approval. What does not require Other risk-control measures on the market?
Correct
Such findings are compared with existing limitations, with exceptions subject to Senior Management review and approval. Such industry risk-control measures include: tracking the aging of inventories, analyzing the role of traders and re-evaluating existing risk management strategies.
Incorrect
Such findings are compared with existing limitations, with exceptions subject to Senior Management review and approval. Such industry risk-control measures include: tracking the aging of inventories, analyzing the role of traders and re-evaluating existing risk management strategies.
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Question 25 of 30
25. Question
Tier-one businesses use simulation to determine their vulnerability to interest rates and to create the optimal floating- and fixed-rate debt ratio. In the degree practicable, they are:
Correct
They: control interest rate volatility and the floating-to-fixed ratio by investing as much as possible, or using interest rate derivatives and caps to change their interest rate risk profile.
Incorrect
They: control interest rate volatility and the floating-to-fixed ratio by investing as much as possible, or using interest rate derivatives and caps to change their interest rate risk profile.
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Question 26 of 30
26. Question
Banks who have researched the root causes of organizational risk understand that it is causal and directed to occurrence. The consequences are inevitably financial loss and destruction, all the way to reputational risk. The Basle Committee has proposed numerous methods of planning for operating risk in terms of the financial capital needed. These range:
Correct
The Basle Committee has proposed numerous methods of planning for operating risk in terms of the financial capital needed. Such ranges: from the hierarchical system, to a near-bottom-up approach to loss distribution, to the top-down scoreboard.
Incorrect
The Basle Committee has proposed numerous methods of planning for operating risk in terms of the financial capital needed. Such ranges: from the hierarchical system, to a near-bottom-up approach to loss distribution, to the top-down scoreboard.
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Question 27 of 30
27. Question
Danger and the monitoring mechanisms will be subject to continuous testing and study. Through constant diligence, when we happen across it, we can not find a remedy in recognizing the risk we are taking. Yet this information should be balanced by experimentation and does not allow for the following:
Correct
This awareness should be complemented by innovation that accounts for: growing uncertainty, the possibility of ‘that’ or’ that ‘risk being a significant factor, and the reassessment of risk and reward associated with a evolving business climate or investment plan.
Incorrect
This awareness should be complemented by innovation that accounts for: growing uncertainty, the possibility of ‘that’ or’ that ‘risk being a significant factor, and the reassessment of risk and reward associated with a evolving business climate or investment plan.
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Question 28 of 30
28. Question
The opportunity to pull in equity relies to a large extent on the straightforward price of shares for investors and sellers. For this position, aid are the electronic trading platforms. They are also a valuable means of pooling the buying criteria of buyers, regardless of their location. Properly employed, what will technology do?
Correct
Technology should be used properly: encourage market stability and increasing the level at which instructions are performed.
Technology aims to reinforce the gains obtained from convergence of financial markets. Without high technology, the demands faced by major institutional investors can not be fulfilled.Incorrect
Technology should be used properly: encourage market stability and increasing the level at which instructions are performed.
Technology aims to reinforce the gains obtained from convergence of financial markets. Without high technology, the demands faced by major institutional investors can not be fulfilled. -
Question 29 of 30
29. Question
Technology offers an architecture that can be used efficiently to monitor the exposure of investors; but although technology is essential, it is not necessary to presume a robust solution for risk management. The most critical element is the recognition from management that:
Correct
The most critical element is management’s understanding that: risks must be proactively managed, and a unit entirely independent of risk-taking will be used to define and handle them.
Incorrect
The most critical element is management’s understanding that: risks must be proactively managed, and a unit entirely independent of risk-taking will be used to define and handle them.
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Question 30 of 30
30. Question
What does a standard and open style of financial reporting do?
Correct
A standard and consistent model for financial reporting: Eliminates knowledge asymmetries between creditors and issuers and leads in order to better identify risks, while still reducing capital costs.
Incorrect
A standard and consistent model for financial reporting: Eliminates knowledge asymmetries between creditors and issuers and leads in order to better identify risks, while still reducing capital costs.