Preview Questions Wealth Manager | Role Specific Skill

Question 1: In portfolio construction, what is the significance of a portfolio's beta?

Which action should you take?

Choose only one option

It measures the portfolio's expected return

It measures the portfolio's sensitivity to overall market movements

It measures the diversification level of the portfolio

It calculates the portfolio's liquidity risk

Question 2: How can a wealth manager utilize a tax-advantaged trust to minimize estate taxes for a client?

Which action should you take?

Choose only one option

By avoiding using any estate planning tools and allowing the estate to go through probate

By focusing on high-risk investments that generate large returns

By investing only in tax-exempt municipal bonds to reduce tax liabilities

By establishing a trust that takes advantage of the estate tax exemption, reducing the estate's taxable value

Question 3: How can a wealth manager mitigate the risk of capital loss in a volatile market?

Which action should you take?

Choose only one option

Avoid equities and focus only on government bonds

Increase leverage to amplify returns and offset losses

Use stop-loss orders and hedging strategies to limit potential losses

Hold investments until the market stabilizes

Question 4: What is the main benefit of investing in real estate investment trusts (REITs) for a diversified portfolio?

Which action should you take?

Choose only one option

They offer high potential for capital appreciation

They provide regular income through dividends and capital gains

They reduce market volatility by focusing on stable, physical assets

They allow exposure to both commercial and residential real estate

Question 5: How should a wealth manager incorporate tax-efficient strategies in managing a client's portfolio?

Which action should you take?

Choose only one option

Invest exclusively in tax-exempt bonds

Choose assets that minimize capital gains tax and focus on long-term growth

Focus on short-term investments to maximize taxable income

Avoid investments that generate dividend income

Question 6: What strategy should a wealth manager adopt when advising a client to manage liquidity needs while also seeking portfolio growth?

Which action should you take?

Choose only one option

Keep the majority of the portfolio in cash to ensure liquidity

Build a portfolio with a mix of liquid assets (stocks, bonds) and less-liquid investments

Focus solely on illiquid, high-growth investments to maximize returns

Allocate all assets to illiquid private equity and real estate