Cwmc Module 19: Investment & Retirement Competency Test
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This quiz is part of LFE Institute's CWMC (Certified Workplace Money Coaching) course. It will test your proficiency in the Investment & Retirement Module (Module 19) of the program. The questions are all multiple choice, and are designed to be a review of this Module. Let LFE know when you've successfully completed this test and are ready to begin the next Module. Correct answers required for passing grade: 13/15
- 1.Which of the following terms does NOT pertain to retirement investments?
- A.
Mutual funds
- B.
Load
- C.
No-load
- D.
Load-Bearing Wall
- E.
Front-end load
- 2.What questions should be asked when interviewing a potential investment advisor? (check all that apply)
- A.
What credentials does your spouse have?
- B.
Have you been convicted of a felony or seriously reprimanded by the SEC or governing body of your field?
- C.
What military service background, if any, do you have?
- D.
How are you compensated?
- E.
May I have names of other clients and the amount you are investing for them?
- 3.Which of the following is NOT the correct definition for the corresponding advisor designation?
- A.
CPA: Certified Public Accountant
- B.
PFS: Personal Financial Specialist (CPAs who specialize in the financial planning area)
- C.
CFP: Certified Financial Planner
- D.
CLU: Controlled Legal Underwriter (Insurance agent)
- E.
CFA: Chartered Financial Analyst
- 4.When meeting an advisor for the first time, an investor should consider it a "red flag" if the advisor:
- A.
Explains risk tolerance clearly so that the client understands it
- B.
Asks about the investments the client currently has
- C.
Makes an immediate recommendation to save the client time
- D.
Discusses the pros and cons of maxing out a 401(k) plan before investing in other investment options
- E.
Clarifies the client’s financial goals
- 5.To reduce repetitive or redundant words in Money Coaching responses, Money Coaches can find valuable synonyms by using:
- A.
A thesaurus
- B.
Financial Advisor's Desk Reference
- C.
A Blue Book
- D.
Bartlett’s Famous Quotations
- E.
The World Almanac
- 6.A primary goal in CWMC Module 19 Investments & Retirement is learning how to explain financial terms and strategies ________ .
- A.
To prepare employees for a possible career in finance
- B.
As defined in Webster’s or other accessible dictionaries
- C.
In language that every employee can understand
- D.
In the proper font, size and formatting
- E.
None of the above
- 7.Which of the following would NOT be considered a common annuity term or type?
- A.
Fixed Annuity
- B.
Legislative Annuity
- C.
Variable Annuity
- D.
Immediate Annuity
- E.
Equity-Index Annuity
- 8.Which of the following is generally true?
- A.
Class A shares are sold with an up-front sales charge
- B.
Class B shares are sold without an up-front sales charges but carry higher annual expenses for a fixed period
- C.
Class 529 shares were created to help investors save for higher education expenses through a tax-advantaged account
- D.
All of the above are true
- E.
None of the above are true
- 9.If retired employees do not have enough money saved to live comfortably during retirement, they can stretch their retirement dollars through which of the following strategies? (check all that apply)
- A.
Continue to work as long as possible during their retirement years
- B.
Find a less expensive area with lower cost-of-living, taxes, housing, and healthcare costs
- C.
Consider a reverse mortgage to generate additional living income after age 70–75
- D.
Downsize the cost of their home and car, and eliminate as many long-term debts until they are absolutely needed
- 10.Which of the following basic strategies should an employee consider when investing?
- A.
Avoid emotional investing
- B.
Invest heavily in company stock if the employee has inside information and knows they are doing well
- C.
Invest in Life Cycle funds, fixed investments, balance funds, and a fixed income investment; this is a good way to diversify
- D.
Time the market by watching the news everyday and react accordingly; it’s the safest way to invest for the long term
- E.
All of the above
- 11.Which of the following can be a good strategy for handling the money in a company 401(k) when an employee leaves the company?
- A.
Withdraw the money and pay down high-interest credit card debts
- B.
Use the money to buy a new home if housing values are low; it’s one of the safest investments over the long term
- C.
Leave the money in the current employer if the plan is doing well
- D.
Have the employer write a check for the balance in the account and use the 60-day time period to find a good IRA option
- E.
All of the above could be good strategies
- 12.What are the drawbacks of investing in annuities? (check all that apply)
- A.
High commissions
- B.
Significant early withdrawal penalty
- C.
Does not grow tax deferred like a 401(k)
- D.
Can only invest $5,000/year if the investor is under the age of 50
- 13.Which of the following factors or strategies should an employee consider when investing for retirement? (check all that apply)
- A.
The employee’s age, specifically, how many years until retirement
- B.
The employee’s risk tolerance
- C.
If the employee is under the age of 50, he/she should have at least 50% in equity funds
- D.
The employee should be conservative; he/she can’t afford to invest retirement dollars in anything that could lose value
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