RIA Economic & Financial

Question 1

What is the primary fiduciary duty of a Registered Investment Advisor?

Accepted Answer

To act in the client’s best interest.

Answer

To earn the highest commission.

Answer

To minimize taxes.

Answer

To outperform the market.

Question 2

Which of the following best describes a 'fee-only' RIA?

Accepted Answer

Is compensated solely through client-paid fees.

Answer

Receives commissions from product sales.

Answer

Earns both commissions and fees.

Answer

Charges fees based on investment performance.

Question 3

What is the purpose of the ADV Part 2 form?

Accepted Answer

To disclose detailed firm and advisor information.

Answer

To report capital gains.

Answer

To track performance benchmarks.

Answer

To file tax returns with the IRS.

Question 4

Which regulation primarily governs Registered Investment Advisors?

Accepted Answer

Investment Advisers Act of 1940

Answer

Securities Act of 1933

Answer

Investment Company Act of 1940

Answer

Dodd-Frank Act

Question 5

What is the main advantage of diversification in a client’s portfolio?

Accepted Answer

Reduces the impact of any single asset's poor performance.

Answer

Maximizes returns at all times.

Answer

Eliminates all types of risk.

Answer

Guarantees profit regardless of market conditions.

Question 6

Which account type offers tax-deferred growth and is often used for retirement?

Accepted Answer

Traditional IRA

Answer

Checking account

Answer

Brokerage account

Answer

Savings account

Question 7

Which of the following is considered a liquid asset?

Accepted Answer

Mutual funds

Answer

Real estate

Answer

Private equity

Answer

Collectibles

Question 8

What does a high beta value indicate about a stock?

Accepted Answer

It is more volatile than the market.

Answer

It has low volatility.

Answer

It moves opposite to the market.

Answer

It is less risky than the market.

Question 9

What is an ETF?

Accepted Answer

An exchange-traded investment fund.

Answer

A type of bond.

Answer

A mutual fund that isn't regulated.

Answer

A stock index.