Choose wisely. There is only one correct answer to each question.
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1.
To determine how profitable a company is, you can examine its cash flow.
False. Cash flow does not tell you much about profitability. The metric you want is return on assets, which measures how well a company uses investors' money.
2.
What is included in an ADV form?
The advisor's resume. The ADV form includes advisors' educational backgrounds and professional designations. It also discusses how the advisor is compensated, and whether he or she has ties to particular insurance or mutual fund companies.
3.
After a major life event, you should _______.
Re-evaluate your investment goals and risk tolerance. Not every life event has to trigger changes for every investor's portfolio. But we should all re-evaluate our financial plans as we pass through a life stage.
4.
Every life event triggers changes for an investor's portfolio.
False. Any given life event may or may not trigger such a change, though most do.
5.
What kind of organizations would you consult to find out whether a prospective financial advisor has ever been subjected to disciplinary action?
Regulatory organizations. Regulatory organizations--whether professional or governmental--can tell you whether your candidate has ever been disciplined.
