1|Page
AAMS EXAM NEWEST 2025 ACTUAL EXAM TEST
BANK| COMPLETE 450 REAL EXAM QUESTIONS AND
CORRECT DETAILED ANSWERS (VERIFIED
ANSWERS) ALREADY GRADED A+| AAMS EXAM PREP
2025 (BRAND NEW!!)
A company is planning to borrow large amounts of money to fund a
major expansion. This company is increasing which type of risk?
A) Market risk
B) Financial risk
C) Interest rate risk
D) Systematic risk – Correct Answer - C
Assume you have the following portfolio:
Stock: BCD | EFG | HIJ
Weight: 40% | 25% | 35%
Beta: 1.15 | .90 | 1.05
What is the overall weighted beta for this portfolio?
A) 1.06
B) 1.12
C) 1.10
D) 1.01 – Correct Answer -A
pg. 1
,2|Page
Using the capital asset pricing model, what is the expected return for a
stock where its beta is 1.20, the risk-free rate is 4%, and the market rate
of return is 10%? (Set calculator for four decimal places to reduce
rounding error.)
A) 11.2%
B) 8.8%
C) 16.0%
D) 10.1% – Correct Answer -A
According to the investment pyramid, which one of the following
sequences is correct in terms of increasing safety of principal (least to
most safety of principal)?
A) limited partnerships, Treasury securities, high-grade corporate bonds
B) variable annuities, puts and calls, money market accounts
C) futures contracts, balanced mutual funds, EE bonds
D) gold, high-grade municipal bonds, growth mutual funds – Correct
Answer -C
Which one of the following is correct regarding how diversification can
affect risk?
A) Diversification of assets reduces unsystematic risk without
necessarily reducing return.
B) Negative correlation of assets increases systematic risk with a
corresponding increase in return.
C) Unsystematic risk is unaffected by diversification within an asset
class.
pg. 2
,3|Page
D) Positive correlation of assets increases systematic risk with a
corresponding increase in return. – Correct Answer - A
A core/satellite approach to asset allocation is a combination of which
two asset allocation approaches?
A) Tactical/strategic
B) Dynamic/efficient
C) Strategic/buy and hold
D) Tactical/dynamic – Correct Answer - A
Assume the following correlations between long-term government bonds
and the following asset classes:
- Small stocks: .17
- Foreign stocks: .21
- Treasury bills: -.12
- Gold: -.25
Which one of these asset classes will provide the most diversification
with long-term government bonds?
A) Foreign stocks
B) Gold
C) Small stocks
D) Treasury bills – Correct Answer - B
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If a client has a time horizon of one to five years, in general the most
appropriate asset is
A) large-cap common stocks.
B) short-term bonds.
C) foreign stocks.
D) money market mutual funds. – Correct Answer - B
Tammy invested $20,000 in a mutual fund 11 years ago. If she earns
10% compounded annually on this investment, what is the fund's value?
A) $56,788
B) $57,062
C) $55,491
D) $58,760 – Correct Answer - B
Ted plans to invest $3,000 in an IRA for 18 years at the beginning of
each year. He expects to earn 9% compounded annually on this
investment. What will be the value of this investment under these
assumptions?
A) $135,055
B) $112,351
C) $123,904
D) $136,798 – Correct Answer - A
Assume you own XYZ Stock Fund, which returned 14% over the past
five years. During this period, the stock market returned 12%. This fund
pg. 4
AAMS EXAM NEWEST 2025 ACTUAL EXAM TEST
BANK| COMPLETE 450 REAL EXAM QUESTIONS AND
CORRECT DETAILED ANSWERS (VERIFIED
ANSWERS) ALREADY GRADED A+| AAMS EXAM PREP
2025 (BRAND NEW!!)
A company is planning to borrow large amounts of money to fund a
major expansion. This company is increasing which type of risk?
A) Market risk
B) Financial risk
C) Interest rate risk
D) Systematic risk – Correct Answer - C
Assume you have the following portfolio:
Stock: BCD | EFG | HIJ
Weight: 40% | 25% | 35%
Beta: 1.15 | .90 | 1.05
What is the overall weighted beta for this portfolio?
A) 1.06
B) 1.12
C) 1.10
D) 1.01 – Correct Answer -A
pg. 1
,2|Page
Using the capital asset pricing model, what is the expected return for a
stock where its beta is 1.20, the risk-free rate is 4%, and the market rate
of return is 10%? (Set calculator for four decimal places to reduce
rounding error.)
A) 11.2%
B) 8.8%
C) 16.0%
D) 10.1% – Correct Answer -A
According to the investment pyramid, which one of the following
sequences is correct in terms of increasing safety of principal (least to
most safety of principal)?
A) limited partnerships, Treasury securities, high-grade corporate bonds
B) variable annuities, puts and calls, money market accounts
C) futures contracts, balanced mutual funds, EE bonds
D) gold, high-grade municipal bonds, growth mutual funds – Correct
Answer -C
Which one of the following is correct regarding how diversification can
affect risk?
A) Diversification of assets reduces unsystematic risk without
necessarily reducing return.
B) Negative correlation of assets increases systematic risk with a
corresponding increase in return.
C) Unsystematic risk is unaffected by diversification within an asset
class.
pg. 2
,3|Page
D) Positive correlation of assets increases systematic risk with a
corresponding increase in return. – Correct Answer - A
A core/satellite approach to asset allocation is a combination of which
two asset allocation approaches?
A) Tactical/strategic
B) Dynamic/efficient
C) Strategic/buy and hold
D) Tactical/dynamic – Correct Answer - A
Assume the following correlations between long-term government bonds
and the following asset classes:
- Small stocks: .17
- Foreign stocks: .21
- Treasury bills: -.12
- Gold: -.25
Which one of these asset classes will provide the most diversification
with long-term government bonds?
A) Foreign stocks
B) Gold
C) Small stocks
D) Treasury bills – Correct Answer - B
pg. 3
, 4|Page
If a client has a time horizon of one to five years, in general the most
appropriate asset is
A) large-cap common stocks.
B) short-term bonds.
C) foreign stocks.
D) money market mutual funds. – Correct Answer - B
Tammy invested $20,000 in a mutual fund 11 years ago. If she earns
10% compounded annually on this investment, what is the fund's value?
A) $56,788
B) $57,062
C) $55,491
D) $58,760 – Correct Answer - B
Ted plans to invest $3,000 in an IRA for 18 years at the beginning of
each year. He expects to earn 9% compounded annually on this
investment. What will be the value of this investment under these
assumptions?
A) $135,055
B) $112,351
C) $123,904
D) $136,798 – Correct Answer - A
Assume you own XYZ Stock Fund, which returned 14% over the past
five years. During this period, the stock market returned 12%. This fund
pg. 4
