AAFM Wealth Management Strategies 3

Question 1

Which wealth transfer strategy uses annual exclusion gifts to reduce an estate without using the lifetime exemption?

Accepted Answer

Annual gift tax exclusion

Answer

Qualified personal residence trust

Answer

Grantor retained annuity trust

Answer

Installment sale

Question 2

Core-satellite portfolio construction combines which two components?

Accepted Answer

A passive low-cost core with active satellite positions

Answer

Domestic and international equities

Answer

Fixed income and alternatives

Answer

Large-cap and small-cap stocks

Question 3

Which financial planning ratio measures whether liquid assets can cover short-term liabilities, indicating emergency fund adequacy?

Accepted Answer

Current ratio

Answer

Savings rate

Answer

Debt-to-income ratio

Answer

Return on net worth

Question 4

Monte Carlo simulation is used in financial planning primarily to model which type of uncertainty?

Accepted Answer

Sequence of returns risk

Answer

Tax law changes

Answer

Inflation-adjusted Social Security benefits

Answer

Advisor fee impact

Question 5

Which insurance product provides guaranteed income for life in exchange for a lump sum, addressing longevity risk?

Accepted Answer

Immediate annuity

Answer

Term life insurance

Answer

Variable universal life

Answer

Disability insurance

Question 6

Environmental, Social, and Governance (ESG) investing integrates which additional layer into traditional financial analysis?

Accepted Answer

Non-financial sustainability criteria

Answer

Currency risk

Answer

Real estate allocation

Answer

Commodity exposure