Quizzes Flashcards
A rational investor would be considered to be indifferent or uncaring if a profit is realized by a dividend declared by a company versus if the same profit is realized by selling the stock at a gain.
True or False?
True
Which of the following options best completes this sentence: “In the event that a client is trying to communicate a message that is not clear, then the advisor will want to …”
A. Take a break.
B. Reschedule the meeting for another day.
C. Move on.
D. Clarify what the client is trying to communicate with a clarifying statement.
In the event that a client is trying to communicate a message that is not clear, then the advisor will want to clarify what the client is trying to communicate. It could also be that the client is exuding verbal or nonverbal behavior that is inconsistent with what is being said. If there is an ambiguous meaning, it is best to clarify the statement from the client to ensure accuracy or to clear up the ambiguity.
Which of the following is consistent with the Disposition Effect?
A. Investors create mental accounts when they purchase stocks and continue to mark their value to the purchase price even after market prices have changed.
B. Investors acknowledge loss in value, referred to as the paper loss.
C. The normal investor considers the stock a loser if it dips in value.
D. The sale of the stock is irrelevant.
Under the Disposition Effect, investors create mental accounts when they purchase stocks and continue to mark their value to the purchase price even after market prices have changed. They mark stocks to the market only when they sell their stocks and close their mental accounts. Normal investors therefore do not acknowledge the loss in value, referred to as a paper loss, because an open account means that there is still a chance that the stock price will rise, and the stock is not necessarily a loser, but may still turn into a gain. The normal investor does not consider the stock a loser until the stock is sold, at which time the loss is technically realized
in the mind of the normal investor.
Which of the following are consistent with the Cognitive-Behavioral school of thought?
A. Humans are beings that are subject to the same learning principles that were established in animal research.
B. Self-talk, which refers to that ongoing internal conversation one has with oneself that can
influence feelings, and behavior can be reinforced and persist.
C. The counselor’s challenge lies in performing a sound evaluation of how reinforcers are
maintaining problematic self-talk and behaviors.
D. The counselor is the expert in the Cognitive-Behavioral Paradigm, but the counselor and
client have a working alliance where the client must be actively engaged.
E. All of the above.
E. All of the above
Which of the following best describes Behavioral Finance?
A. Behavioral Finance concepts are more developed than Traditional Finance.
B. Behavioral Finance streamlined financial data.
C. Traditional Finance’s introduction of scientific method into financial analysis has some benefit to Behavioral Finance.
D. Behavioral Finance is very similar to Traditional Finance in its asset pricing models and portfolio theories.
The scientific method still has its benefits to Behavioral Finance.
Which of the following statements are consistent with the Developmental Paradigm?
- The majority of humanistic theories view clients as experts on themselves.
- Much of the Developmental approach has its origin in and was influenced by Freudian psychoanalytic theory.
- Counseling in the Developmental Paradigm has an overall aspiration to recount or correct earlier, disrupted development to foster change in the client or the client’s behavior.
A. 1 only.
B. 1 and 3
C. 1 and 2
D. 1, 2, and 3
All of the above are consistent with the Developmental Paradigm.
One of the most reported interruptions or disruptions in passive listening is when:
A. A seminar moderator interrupts the presentation.
B. A friend asks you questions about the presenter’s speech.
C. The listener is thinking about what he or she may say in response to what is being discussed while the listener should instead be listening.
D. The speaker takes too many breaks.
One of the most reported interruptions or disruptions in passive listening is when the listener is thinking about what he or she may say in response to what is being discussed while the listener should instead be listening.
Which of the following is not considered to be in line with the Developmental paradigm or school of thought?
A. Human development occurs in stages over time.
B. Humans develop and progress in a predictable sequence.
C. Results of disruptions in any stage of an individual’s development are completely unpredictable.
D. All of the above.
As to emotions, the Developmental Paradigm assumes that all humans develop and progress in a predictable sequence. Disruptions, whether by trauma, incident or otherwise, at a particular stage of that individual’s development will result in predictable problems, symptoms and behavior.
Which of the following theories or equations govern the premises of Traditional Finance:
- Bottom Line Theory
- Prospect Theory
- The Behavioral Asset Pricing Model
A. 1 only
B. 1 and 3
C. All of the above
D. None of the above
D. None of the above
Which of the following are heuristics or cognitive biases about which an advisor should be knowledgeable?
A. The Affect Heuristic
B. Overreaction bias
C. Overconfidence bias
D. Anchoring
E. All of the above
E. All of the above
Which of the following is usually included in an engagement letter?
A. Defined parties to the agreement
B. Description of fees and costs
C. Time horizon for the work to be completed
D. All the above
D. All the above
During your meeting with your client, Hayden Doyle, you recommended he purchase a personal liability umbrella policy (PLUP). Which part of the financial planning process were you engaged in?
A. Implementing the Financial Planning Recommendations.
B. Presenting the Financial Planning Recommendations.
C. Identifying and Selecting Goals.
D. Monitoring Progress and Updating.
Your suggestion to purchase a new insurance policy falls under Step 5 (Presenting the Financial Planning Recommendations) of the financial planning process. It is not until the new policy is actually purchased that you move on to the Implementing the Financial Planning Recommendations step.
Financial Planners earn compensation in the form of:
A. A percentage of assets managed.
B. An hourly rate or fee.
C. A commission on the investment and insurance products sold.
D. All of the above
D. All of the above
Tiffany Evans, a medical doctor and prospective client, has come to your office for the first time. Which is the most appropriate way to greet her?
A. “Welcome to my office.”
B. “Hi, Tiffany. Welcome to my office.”
You Answered
C. “Welcome to my office, Dr. Evans.”
D. “Welcome to my office, Ms. Evans.”
C. “Welcome to my office, Dr. Evans.”
Which of the following is most likely to take place in the Analyzing the Client’s Current Course of Action and Potential Alternative Courses of Action Step?
A. After your meeting with David, you prepare his current financial statements.
B. In your meeting with Rosie, you sell her a new life insurance policy.
C. During your meeting with Alexis, she provides you with several documents including her employee benefits information and bank statements.
D. You provide your client with a description of the fees and costs of your financial planning services.
Preparing and evaluating financial statements takes place in the Analyzing the Client’s Current Course of Action and Potential Alternative Courses of Action (analyze and evaluate) step. Option B is Implementing the Financial Planning Recommendations, option C is Understanding the Client’s Personal and Financial Circumstances (gathering client data), and option D takes place in the preliminary step where the relationship with the client is established and defined.
TRUE OR FALSE:
The nature of the relationship between advisor and client following the cognitive behavioral approach is highly directed.important clues
TRUE
TRUE OR FALSE:
Self-talk usually does not influence feelings or behavior.
FALSE
TRUE OR FALSE:
The humanistic theory emphasizes accepting personal responsibility, whereas the other two theories do not.
TRUE
TRUE OR FALSE:
Gestures and facial expressions are important clues to communication for the listener.
TRUE
TRUE OR FALSE:
Tone and pitch of voice can indicate congruence or incongruence with the word spoken.
TRUE
TRUE OR FALSE:
Body language does not play an important role in understanding communications.
FALSE
TRUE OR FALSE:
It is better not to make any gestures to the speaker when the advisor is practicing active listening.
FALSE
