RMA Research Methods & Evidence-Based Practice 2

Question 1

In a retirement income study, the Sharpe ratio is used to evaluate a portfolio by measuring:

Accepted Answer

Risk-adjusted return per unit of total volatility

Answer

The Sharpe ratio divides excess return over the risk-free rate by the portfolio's standard deviation, yielding risk-adjusted performance.

Question 2

Which research design best establishes causality when studying the impact of a new retirement savings program?

Accepted Answer

Randomized controlled trial

Answer

Randomized controlled trials randomly assign participants to treatment and control groups, making them the gold standard for establishing causal relationships.

Question 3

An RMA adviser reviews a Monte Carlo simulation showing a 90% probability of plan success. This means:

Accepted Answer

90 out of 100 simulated scenarios maintained solvency through the planning horizon

Answer

Monte Carlo success probability represents the percentage of simulated scenarios in which the portfolio lasted through the specified time horizon.

Question 4

When evaluating peer-reviewed research on sequence-of-returns risk, an adviser should first assess:

Accepted Answer

The methodology, sample size, and whether findings were replicated

Answer

Critical appraisal requires examining methodology rigor, adequate sample size, and replication before accepting research conclusions.

Question 5

A withdrawal rate study uses a 30-year historical rolling period analysis. A key limitation of this approach is:

Accepted Answer

Rolling periods overlap, making the observations statistically dependent

Answer

Overlapping rolling periods share data points, violating the independence assumption and overstating the number of truly independent observations.

RMA Practice Test

RMA Practice Test

RMA Research Methods & Evidence-Based Practice 2