Accredited Investment Fiduciary (AIF) Training Practice Test

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• Periodic reviews of qualitative information on money managers should include all of the following EXCEPT which?
• Which statement about soft dollar arrangements is true?
• Which entity reviewed the handbook for Investment Advisors?
• The primary role of the fiduciary under prudent practice is to manage the investment process, rather than making individual stock and bond picks.
• All of the following are true of the ERISA §405(c) Safe Harbor EXCEPT:
• Periodic reviews of the qualitative information on the money managers should include all of the following EXCEPT:
• Prudent experts must be chosen by which process?
• Which of the following is a component of the Seven Global Fiduciary Precepts?
• Chasing top quartile performance is a difficult game to win because:
• Which item is listed as part of the Center's suggested minimum due diligence?
• Calculate the equilibrium spending rate (ESR) given a model portfolio return of 9%, a 2.5% inflation rate, and total account expenses of 1%.
• Which safe harbor provisions are unique only to the Fiduciary Adviser Safe Harbor?
• The monitoring phase is the most labor-intensive and time-consuming activity in the fiduciary quality management process.
• Which measure captures market risk relative to a benchmark?
• Under the normal distribution, approximately 95% of expected returns fall within one standard deviation of the mean.
• When setting upper and lower limits that would trigger a rebalancing decision, consideration should be given to:
• The decision of whether to implement with mutual funds or separate account managers should be based on which of the following?
• Which measure is the most widely accepted for absolute risk?
• With respect to separately managed accounts, a primary consideration with respect to the selection of the custodian is:
• The seventh Global Fiduciary Precept requires the fiduciary to avoid prohibited transactions and conflicts of interest. An example of a prohibited transaction is:
• Which of the following is NOT listed as part of the Center's suggested minimum due diligence?
• fi360 has established minimum due diligence criteria for selecting investments. Which item is NOT typically included?
• In the event of litigation, which factors will a judge consider when determining fiduciary status?
• All of the following are benefits of a CEFEX assessment EXCEPT:
• Which of the following statements about the purpose and benefits of CEFEX assessments is true?
• Which of the following is NOT a benefit of a Certification of Fiduciary Excellence?
• When the fiduciary provides at least three investment options in accordance with 404(c) Safe Harbor requirements, the fiduciary has complete discretion over all investment decisions.
• Which statement best describes the relationship between a policy portfolio and an IPS?
• In the hierarchy of asset allocation decisions, which is the first and most important decision?
• Under the Uniform Fiduciary Standards of Care, which of the following would NOT be considered a prudent expert?
• Periodic performance reports should compare the performance of money managers against all of the following EXCEPT:
• How often should performance reports be prepared and reviewed?
• Under ERISA's framework, who is responsible for monitoring the activities of prudent experts?
• The Prudent Practices described in the handbook relate to which concept?
• Under 404(c), providing at least three investment options and designating investment managers is a true description of the requirement.
• ABO pertains to which type of retirement plan?
• The policy portfolio is:
• Which of the following is NOT one of the seven Global Fiduciary Precepts?
• Which statement correctly describes the scope of an Investment Steward?
• Which of the following is a documented benefit of a CEFEX assessment?
• Taft-Hartley plans are governed by ERISA. Which agencies oversee ERISA?
• All of the following are reasons to revisit service agreements at least every 3 years EXCEPT:
• The time horizon of a portfolio is most directly influenced by which factor?
• Which statement best describes a negatively correlated asset pair in terms of diversification?
• Which of the following best describes a factor to evaluate when choosing how many asset classes to include in a portfolio?
• Which of the following are responsibilities of the fiduciary even when certain duties have been delegated to prudent experts?
• The Global Fiduciary Precepts state investment decisions are to be made by prudent experts. Which entities would be considered prudent experts?
• The best way to rebalance a particular asset class is to:
• The decision of whether to implement with mutual funds or separate account managers should include consideration of:
• Fiduciary responsibility requires one to avoid investments that are imprudent. Investments that are inherently imprudent include:
• All of the following are variables included in the Capital Asset Pricing Model EXCEPT:
• An investment advisor must take discretion of the investment assets in order to provide comprehensive and continuous investment advice.
• In the Hierarchy of Decisions, which decision is considered the most important?
• Are all investment advisors fiduciaries by virtue of having discretion?
• Revisiting service agreements at least every three years is best described as
• An investment policy statement to be complete should address:
• Which of the following is NOT true of socially responsible investing (SRI)?
• Decisive factors to consider when analyzing the number of asset classes to include in a portfolio EXCEPT
• In today's electronic environment, the geographical location of the custodian has become almost irrelevant. The experience level of the custodian's key personnel and whether they have sufficient insurance to cover portfolio assets are important considerations regardless of the type of investment. For separately managed accounts, however, custodial statement transaction detail is a primary consideration if the fiduciary is to determine whether the managers are seeking best price and execution with respect to the trades.
• Which legislation requires investments to be managed solely in the best interests of the participants/beneficiaries?
• Which professionals are included in the broad category of fiduciary advisors?
• Which items should be used when evaluating a money manager's performance?
• Under the IPS, the Investment Committee is responsible for which duties?
• For separately managed accounts, which factor is considered important regardless of investment type?
• The decision of whether to implement with mutual funds or separate account managers should be based on:
• All available safe harbors:
• Which statement best defines a fiduciary?
• In CAPM, which term correctly identifies the measure of an asset's sensitivity to overall market movements?
• Which statement about standard deviation is true?
• A custodian does not perform fiduciary roles.
• Which item is NOT part of a due diligence philosophy for selecting investment options?
• Which organization is the standards setting body for fi360?
• Who is permitted to receive revenue sharing payments?
• Under the Global Fiduciary Precepts, prudent experts would include which entities?
• Which of the following is NOT a permissible default alternative under the QDIA 'safe harbor'?
• Which of the following is NOT listed as a Safe Harbor action for prudent experts?
• In periodic qualitative reviews of money managers, which item is typically included?
• The most accurate statement about the policy portfolio is:
• In the Center's framework, what is Alpha described as?
• The Prudent Practices for Investment Stewards and Investment Advisors have been designed to be applicable to:
• A fiduciary or co‑fiduciary cannot be held responsible for a breach of fiduciary duty if they claim they were unaware of a duty.
• Under the normal distribution curve, approximately 95% of the expected returns fall within one standard deviation of the mean.
• When the fiduciary provides at least three investment options in accordance with 404(c) Safe Harbor requirements, the fiduciary has complete discretion over all investment decisions.
• Which of the following is NOT a responsibility of the Investment Steward with respect to proxy voting?
• The investment policy statement should specify all of the following EXCEPT:
• The QDIA Safe Harbor provisions are voluntary and apply to which type of plan?
• What is the purpose of a fiduciary assessment?
• The Seven Global Fiduciary Precepts include:
• Which of the following would be least essential in periodic due diligence reviews?
• Which factor is used to compare fund costs across peers?
• Which scenario would most likely be a prohibited transaction due to conflict of interest?
• Another name for exculpatory clauses is:
• Under the Fiduciary Adviser Safe Harbor, prudent experts must be selected by which process?
• Which equation correctly represents the equilibrium spending rate (ESR) given return, inflation, and expenses?
• What are the consequences to an investment option that fails to meet watch list criteria?
• Which are measures of risk-adjusted return?
• Practice 2.4 (Selected asset classes are consistent with the client's time horizon and risk and return objectives) does not apply to participant-directed plans.
• A due diligence philosophy for selecting investment options should incorporate all of the following EXCEPT:
• Which item is NOT a suggested minimum due diligence for investment options?
• In evaluating money managers, which item would be least likely to be considered a factor during due diligence?
• Reports on money managers should compare them against:
• Which of the following does not automatically entail the assumption of fiduciary responsibility?
• Which approach best preserves tax efficiency when rebalancing?
• When conducting an assessment of an investment policy statement to determine conformity to the Prudent Investment Practices, the AIF or AIFA designee would normally not record a non-conformity (NCR) if the IPS fails to address:
• As an AIF designee, you may conduct which of the following types of assessments?
• Step Four of the Investment Management Process is to:
• All of the following are benefits of using the Practices EXCEPT:
• Which metric isolates portfolio performance not explained by market risk?
• The correlation coefficient measures the:
• Which statement about socially responsible investing (SRI) and trustee-directed accounts is NOT true?
• Under UPIA, which is an allowed exception for SRI?
• The Uniform Prudent Management of Institutional Funds Act (UPMIFA) governs oversight for foundations and endowments. Which entity provides that oversight?
• The 1/n phenomenon refers to:
• Which item is included in the Seven Global Fiduciary Precepts to ensure alignment of fees and expenses with client objectives?
• What is fi360's simple definition of fiduciary?
• Which Practice specifies that when socially responsible investment strategies are elected, the strategies are structured appropriately and fiduciaries may, but are not required to, include SRI strategies in their investment approach and IPS?
• The Seven Global Fiduciary Precepts include:
• In the Center's framework, Beta is described as a focal point of which portfolio?
• Which of the following best captures the primary objective of rebalancing?
• A CEFEX assessment is intended as which of the following?
• Which statement reflects a fiduciary standard for handling conflicts of interest?
• In litigation, factors judge considers when determining fiduciary status EXCEPT:
• The investment policy statement should be specific enough that a ______ could implement the plan.
• Which statement best reflects the purpose of the twenty-two Practices for Investment Stewards and Investment Advisors?
• What is the purpose of the twenty-two Practices defined for Investment Stewards and Investment Advisors?
• Legislation underlying the fiduciary Practices suggests U.S. Courts should have access to client assets in cases of egregious fiduciary violations. True or False?
• Legislation underlying the fiduciary Practices indicates that client assets are protected from theft and embezzlement.
• During an investment committee meeting, the most significant responsibility is to:
• All of the following statements about the investment policy statement governance are true, including who is typically involved in duties and responsibilities, EXCEPT:
• When selecting funds for a retirement plan, which statement about fund objectives is most accurate?
• A trustee might NOT be acting in a fiduciary capacity if that trustee is a:
• ERISA Safe Harbor provisions provide protection for fiduciary decisions when conditions are met. Which statement best reflects this?
• Among the following, which professional is included in the definition of investment advisors?
• Which statement best describes the nature of a CEFEX assessment?
• All of the following are provisions of the core safe harbor that applies to ERISA retirement plans EXCEPT:
• In periodic qualitative reviews, which item is typically included?
• The fiduciary has the responsibility to control and account for investment expenses; the most effective way to do this is to identify the fee paid for each particular service.
• Regulatory oversight by a State Attorney General of fiduciary matters is commonly associated with which legislation?
• Under ERISA fiduciary prudent experts safe harbor, which action is required of the plan fiduciary?
• The Uniform Prudent Management of Institutional Funds Act creates a presumption of imprudence if:
• To an investment fiduciary, a soft dollar is defined as:
• The investment policy statement is needed for all of the following reasons EXCEPT:
• An Investment Policy Statement (IPS) primarily provides guidance on:
• Which organization awards the Accredited Investment Fiduciary (AIF) and Accredited Investment Fiduciary Analyst (AIFA) credentials?
• Legislation underlying the Practices indicates that U.S. Courts should have access to investment assets in the event there are egregious violations of fiduciary responsibility.
• All of following are decisive factors to consider when analyzing the number of asset classes to include in a portfolio EXCEPT:
• Which of the following does not automatically entail fiduciary responsibility?
• The 'Safe Harbor' provisions applicable to 404(c) include which of the following?
• The investment policy statement should be specific enough that a ______ could implement the plan.
• Soft-dollar arrangements may be used to fund which type of activity that directly supports the investment program?
• Under the normal distribution curve, one standard deviation encompasses 66% of the sample and two standard deviations encompass 95% of the sample. Thus, a portfolio with an expected return of 8% and a standard deviation of 17% could be expected to have a return of less than -9% or more than 25% in approximately 3 years out of 9.
• From a best practice standpoint, performance reports should be prepared and reviewed at least:
• One of the Uniform Fiduciary Standards of Care is to control and account for investment expenses. Investment expenses would NOT include:
• When fiduciary status is in doubt, which situation is likely to deem the individual a fiduciary?
• Safe harbors are: They are voluntary; may insulate from liability; and require demonstration of compliance.
• With respect to separately managed accounts, a primary consideration with respect to the selection of the custodian is:
• Which description best defines investment advisors?
• Which factor for screening funds in a retirement plan universe is NOT typically emphasized?
• Most fiduciary shortfalls occur in which step of the Fiduciary Quality Management System?
• Which statement is NOT part of the fiduciary definition?
• All of the following are true of the policy portfolio EXCEPT
• What is the best way to rebalance a particular asset class?
• In the Fiduciary Quality management System, which step directly precedes Monitor?
• Breach of fiduciary responsibility is:
• Assets are required to be within the jurisdiction of appropriate courts because:
• Alpha is a measure of the difference between a portfolio's actual returns and its _________________, given its level of risk as defined by Beta (β).
• Which term is another name for exculpatory clauses?
• Which of the following is a permissible QDIA safe harbor option?
• What is the purpose of the twenty-one Practices defined for Investment Stewards and Investment Advisors?
• Quarterly reports should compare the performance of money managers against all of the following EXCEPT:
• Which statement about soft dollars is accurate?
• The Safe Harbor requirements under the 2006 Pension Protection Act require the fiduciary adviser to have at least 10 years investment experience.
• Which statement best captures a recommended characteristic of a due diligence process?
• Which of the following is a reason to prepare an investment policy statement:
• The capital markets inputs, or optimizer variables, include:
• Under Safe Harbor for 404(c) requirements, fiduciaries providing at least three investment options must not maintain complete discretion over all investment decisions.
• Which metric evaluates returns after adjusting for risk relative to peers?
• Why is jurisdiction of assets important?
• What is the purpose of the twenty-two Practices defined for Investment Stewards and Investment Advisors?
• IPS implementation typically involves a role performed by which party?
• The QDIA Safe Harbor provisions apply to which of the following plan types?
• The most important decision in the Hierarchy of Decisions is:
• Under the Uniform Prudent Management of Institutional Funds Act, the presumption of imprudence is created if:
• Rebalancing is intended to serve all of the following purposes EXCEPT:
• Standard deviation is:
• Which statement correctly identifies a non‑fiduciary?
• By carefully monitoring custodial reports, a fiduciary may identify all of the following problems EXCEPT:
• The law does NOT require fiduciaries to hire prudent experts to help manage the investment management process.
• Periodic reviews should also include qualitative and/or organizational changes to the money manager. Factors to consider would NOT include:
• Which statement about soft-dollar arrangements is NOT true?
• Which of the following is a reason to prepare an investment policy statement?
• This statement is partially correct. If the fiduciary seeks to take advantage of the Safe Harbor protection afforded them through 404(c), he or she must provide at least three investment options, but they should not maintain complete discretion over all investment decisions. Another 404(c) requirement is that they give discretion to the investment managers.
• The following might be considered an insurance policy for trustees:
• Which statement best describes the Investment Policy Statement (IPS)?
• If a manager's custodial statements show they execute all trades through only one or two broker-dealers, this suggests a directed brokerage arrangement.
• The Prudent Practices are organized as a four-step Quality Management System. This framework is not related to the five Principles of Assessment.
• In the context of socially responsible investing (SRI), which scenario is a permissible exception to standard due diligence restrictions?
• Safe Harbor provisions, applicable to committee- and/or advisor-directed investment processes, include all of the following EXCEPT:
• Which of the following best encapsulates fiduciary duties under fi360's framework?
• The core (or general) 'safe harbor' provisions that apply to ERISA retirement plans EXCEPT:
• In the policy portfolio vs pricing portfolio, which risk metric is central?
• Which designation is required to conduct a Level 3 CEFEX Assessment of Fiduciary Excellence (CAFE)?
• The statement “The monitoring phase is the most labor-intensive and time-consuming activity in the fiduciary quality management process” is:
• The capital markets inputs, or optimizer variables, include which of the following?
• What is the correct statement about an active investing approach in fiduciary prudence?
• Which statement best describes a CAPM-related characteristic that is NOT true?
• Which watch-list question would most clearly indicate a reassessment is warranted?
• Bundled fees can be properly evaluated without actually breaking them into their component parts.
• The fiduciary responsibility of trusts and foundations is primarily framed by Federal legislation.
• In a defined contribution plan with five investment options, which would be most appropriate given typical participant behavior?
• Which would NOT be considered a watch-list termination trigger?
• Reports on money managers should compare them against:
• Which of the following is NOT one of the Principles of Assessment?
• The most beneficial relationship between two asset classes for diversification is when the asset classes are _______.
• An advisor offering a retail version of an institutional separately managed account should ensure the retail portfolios are roughly equivalent to the non-retail version. Which characteristic is NOT expected to be roughly equivalent?
• All of the following are qualitative and/or organizational characteristics of the money manager that should be included in periodic due diligence reviews EXCEPT:
• If the investment strategy is too aggressive for a particular client, in a market where investment results are poor, the client may:
• To conform to an acceptable fiduciary standard of care, portfolio rebalancing must:
• The Prudent Practices are applicable to which of the following?
• The Investment policy statement should be reviewed at least:
• The Fiduciary Quality management System order is: