AAMS STUDY GUIDE 2026/2027 QUESTIONS AND
SOLUTIONS RATED A+
✔✔The provision that certain mutual fund policies cannot be changed without
shareholder approval is addressed in the: - ✔✔Investment Company Act of 1940
✔✔A major responsibility of FINRA is: - ✔✔developing rules and regulations for its
members
✔✔Which of these are provisions of the Sarbanes-Oxley Act of 2002?
I. Requires an anti-money-laundering compliance program to be in effect
II. Requires chief executive officers of public corporations to certify financial information
in the quarterly and annual reports
III. Makes unlawful the extending of credit to any director or executive officer
IV. Requires investment companies to verify the identity of any person opening an
account - ✔✔II and III
✔✔Which act repealed a prohibition that had been in place preventing financial
institutions from offering a combination of commercial banking, investment banking, and
insurance services? - ✔✔Gramm-Leach-Bliley Act of 1999
✔✔The Employee Retirement Income Security Act (ERISA) was primarily passed
because of concern regarding the integrity and safety of: - ✔✔employer-sponsored
retirement plans
✔✔An investment professional who reads investment journals is complying with the: -
✔✔duty to keep current
✔✔You sell your client a GNMA based on your explanation that they are "safe" because
they are guaranteed by the U.S. government. In which one of the following ethical duties
may you have failed your customer? - ✔✔Duty to disclose
✔✔The SEC commissioned a RAND study, which found that there was a great deal of
confusion for investors as far as understanding the differences between - ✔✔broker-
dealers and investment advisers
✔✔Amy, a financial services professional, implies to Ross that she is an expert in option
trading and strategies but, in fact, knows only the basic elements. Looking solely at
Amy's lack of competency in this area, which fiduciary duty has NOT been met?
A) duty of care
B) duty to consult
C) duty to disclose
D) duty to keep current - ✔✔duty of care
,✔✔The fundamental duty of a fiduciary adviser is to look out for the client's best
interest. Which fiduciary duty is most directly tied to making sure all actions are being
made solely for the benefit of the client? - ✔✔duty of loyalty
✔✔Which one of these is least likely to lead to ethical conflicts?
a) unrealistic client expectations
b) reasonable compensation
c) mismatch of client and investment professional
d) monthly production quotas - ✔✔reasonable compensation
✔✔Which one of these statements comparing the suitability standard and the fiduciary
standard is CORRECT?
a) Both approaches are primarily solution driven rather than product driven
b) The suitability standard and the fiduciary standard are essentially the same thing
c) Both approaches require looking out for the best interest of the client
d) verbal disclosure may be adequate under the suitability but not the fiduciary standard
- ✔✔verbal disclosure may be adequate under the suitability but not the fiduciary
standard
✔✔The Uniform Prudent Investor Act identified five fundamental changes in the former
criteria for prudent investing. All of these statements are correctly stated except:
a) prudent investing requires that fiduciaries diversify their investments
b) the trade-off in all investing between risk and return is the fiduciary's central
consideration
c) delegation of trust investment and management functions is permitted subject to
safeguards
d) the standard of prudence is applied to each investment individually - ✔✔the standard
of prudence is applied to each investment individually
✔✔The administration of ERISA is divided among all of these government entities
except the:
a) SEC
b) DOL
c) IRS
d) PBGC - ✔✔SEC
✔✔What was the approximate dollar amount of U.S. retirement assets held in IRA
accounts at the second quarter of 2023? - ✔✔$13.0 trillion
✔✔Which of these statements regarding the level of trust in the financial services
industry is correct?
a) According to a Pershing study, the financial services industry is more concerned
about trust than investors
, b) the Edelman Trust Barometer consistently ranks financial services as one of the most
trusted sectors in our economy
c) despite the overall stock market recovery since the market meltdown in 2008, trust
levels of financial services remain low
d) investor trust has never been an issue for the financial services industry - ✔✔despite
the overall stock market recovery since the market meltdown in 2008, trust levels of
financial services remain low
✔✔In the administration of a qualified retirement plan, which of these individuals is
considered to be a fiduciary?
a) the marketing director of the plan sponsor
b) a financial adviser handling the investment of plan assets
c) a highly compensated employee who participates in the plan
d) a CPA who prepares the plan's Form 5500-Annual Return/Report of Employee
Benefit Plan - ✔✔A financial adviser handling the investment of plan assets
✔✔Which of these is the most important area of concern that was addressed in the
Dodd-Frank Wall Street Reform Act? - ✔✔Systemic risk
✔✔Roger Jones is considering recommending one of two mutual funds for a client.
Although both funds are generally appropriate for the client, one is a proprietary fund
that pays Roger a higher commission and the other has a better risk/return profile.
Roger decides to recommend the latter fund to the client. With which of the following
fiduciary duties has Roger complied?
a) suitability
b) loyalty
c) confidentiality
d) disclosure - ✔✔loyalty
✔✔Which of the following statements regarding the fiduciary standard is CORRECT?
a) it is applied equally and consistently for all financial advisers
b) the general approach is product-driven
c) it would never apply to an insurance agent
d) it is considered a higher standard than the suitability standard - ✔✔it is considered a
higher standard than the suitability standard
✔✔What is the primary function of central clearing counterparties (CCPs) that have
been set up as required by the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010? - ✔✔to facilitate the netting of swap contracts
✔✔Assume Tom's area of expertise is in annuities and insurance products. One of
Tom's clients, Mary, comes to him with specific questions regarding the taxation of her
401(k) contributions based on new tax legislation that was passed earlier in the year.
Tom doesn't know the answer to help Mary. What duty should Tom adhere to in order to
fulfill the duties owed to his client?
SOLUTIONS RATED A+
✔✔The provision that certain mutual fund policies cannot be changed without
shareholder approval is addressed in the: - ✔✔Investment Company Act of 1940
✔✔A major responsibility of FINRA is: - ✔✔developing rules and regulations for its
members
✔✔Which of these are provisions of the Sarbanes-Oxley Act of 2002?
I. Requires an anti-money-laundering compliance program to be in effect
II. Requires chief executive officers of public corporations to certify financial information
in the quarterly and annual reports
III. Makes unlawful the extending of credit to any director or executive officer
IV. Requires investment companies to verify the identity of any person opening an
account - ✔✔II and III
✔✔Which act repealed a prohibition that had been in place preventing financial
institutions from offering a combination of commercial banking, investment banking, and
insurance services? - ✔✔Gramm-Leach-Bliley Act of 1999
✔✔The Employee Retirement Income Security Act (ERISA) was primarily passed
because of concern regarding the integrity and safety of: - ✔✔employer-sponsored
retirement plans
✔✔An investment professional who reads investment journals is complying with the: -
✔✔duty to keep current
✔✔You sell your client a GNMA based on your explanation that they are "safe" because
they are guaranteed by the U.S. government. In which one of the following ethical duties
may you have failed your customer? - ✔✔Duty to disclose
✔✔The SEC commissioned a RAND study, which found that there was a great deal of
confusion for investors as far as understanding the differences between - ✔✔broker-
dealers and investment advisers
✔✔Amy, a financial services professional, implies to Ross that she is an expert in option
trading and strategies but, in fact, knows only the basic elements. Looking solely at
Amy's lack of competency in this area, which fiduciary duty has NOT been met?
A) duty of care
B) duty to consult
C) duty to disclose
D) duty to keep current - ✔✔duty of care
,✔✔The fundamental duty of a fiduciary adviser is to look out for the client's best
interest. Which fiduciary duty is most directly tied to making sure all actions are being
made solely for the benefit of the client? - ✔✔duty of loyalty
✔✔Which one of these is least likely to lead to ethical conflicts?
a) unrealistic client expectations
b) reasonable compensation
c) mismatch of client and investment professional
d) monthly production quotas - ✔✔reasonable compensation
✔✔Which one of these statements comparing the suitability standard and the fiduciary
standard is CORRECT?
a) Both approaches are primarily solution driven rather than product driven
b) The suitability standard and the fiduciary standard are essentially the same thing
c) Both approaches require looking out for the best interest of the client
d) verbal disclosure may be adequate under the suitability but not the fiduciary standard
- ✔✔verbal disclosure may be adequate under the suitability but not the fiduciary
standard
✔✔The Uniform Prudent Investor Act identified five fundamental changes in the former
criteria for prudent investing. All of these statements are correctly stated except:
a) prudent investing requires that fiduciaries diversify their investments
b) the trade-off in all investing between risk and return is the fiduciary's central
consideration
c) delegation of trust investment and management functions is permitted subject to
safeguards
d) the standard of prudence is applied to each investment individually - ✔✔the standard
of prudence is applied to each investment individually
✔✔The administration of ERISA is divided among all of these government entities
except the:
a) SEC
b) DOL
c) IRS
d) PBGC - ✔✔SEC
✔✔What was the approximate dollar amount of U.S. retirement assets held in IRA
accounts at the second quarter of 2023? - ✔✔$13.0 trillion
✔✔Which of these statements regarding the level of trust in the financial services
industry is correct?
a) According to a Pershing study, the financial services industry is more concerned
about trust than investors
, b) the Edelman Trust Barometer consistently ranks financial services as one of the most
trusted sectors in our economy
c) despite the overall stock market recovery since the market meltdown in 2008, trust
levels of financial services remain low
d) investor trust has never been an issue for the financial services industry - ✔✔despite
the overall stock market recovery since the market meltdown in 2008, trust levels of
financial services remain low
✔✔In the administration of a qualified retirement plan, which of these individuals is
considered to be a fiduciary?
a) the marketing director of the plan sponsor
b) a financial adviser handling the investment of plan assets
c) a highly compensated employee who participates in the plan
d) a CPA who prepares the plan's Form 5500-Annual Return/Report of Employee
Benefit Plan - ✔✔A financial adviser handling the investment of plan assets
✔✔Which of these is the most important area of concern that was addressed in the
Dodd-Frank Wall Street Reform Act? - ✔✔Systemic risk
✔✔Roger Jones is considering recommending one of two mutual funds for a client.
Although both funds are generally appropriate for the client, one is a proprietary fund
that pays Roger a higher commission and the other has a better risk/return profile.
Roger decides to recommend the latter fund to the client. With which of the following
fiduciary duties has Roger complied?
a) suitability
b) loyalty
c) confidentiality
d) disclosure - ✔✔loyalty
✔✔Which of the following statements regarding the fiduciary standard is CORRECT?
a) it is applied equally and consistently for all financial advisers
b) the general approach is product-driven
c) it would never apply to an insurance agent
d) it is considered a higher standard than the suitability standard - ✔✔it is considered a
higher standard than the suitability standard
✔✔What is the primary function of central clearing counterparties (CCPs) that have
been set up as required by the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010? - ✔✔to facilitate the netting of swap contracts
✔✔Assume Tom's area of expertise is in annuities and insurance products. One of
Tom's clients, Mary, comes to him with specific questions regarding the taxation of her
401(k) contributions based on new tax legislation that was passed earlier in the year.
Tom doesn't know the answer to help Mary. What duty should Tom adhere to in order to
fulfill the duties owed to his client?
