AAMS Exam fully solved & updated 2026
Questions and Answers
The Asset Management Process is... - Correct answer-Gather data, Establish goals,
Analyze information, Make recommendations and implement, monitor
performance
Required Rate of return formula = - Correct answer-(e)r = Rf + (Rm-Rf)Bp
What is Excess Return ? - Correct answer-Total Portfolio Return - Risk Free Rate
Explain Jensen performance ratio? - Correct answer-This measure of performance
is a measure of absolute risk, meaning it can be used as a stand-alone measure as
apposed to a relative measure (one that compares)
Treynor ratio uses what to measure risk? - Correct answer-beta
Sharpe ratio uses what to measure risk? - Correct answer-Standard Deviation
Treynor formula? - Correct answer-Ti = Excess return / portfolio beta
Sharpe ratio formula? - Correct answer-= Total Portfolio return - Rfr / standard
deviation
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, The Treynor ratio output shows what...? - Correct answer-It shows how much
return each fund generated per one unit of risk
Treynor measure is only appropriate for what type of portfolios? and why? -
Correct answer-fully diversified portfolios; because it uses beta as its measure of
risk, and beta is a systemic type of risk (market risk)
excess return is what? - Correct answer-total portfolio return - Rfr
T or F: Indexes assume that all dividends and distributions are reinvested. - Correct
answer-true
What is risk in terms of investing? - Correct answer-The degree of uncertainty
associated with return of an asset.
Required rate of return formula is AKA as what...? - Correct answer-CAPM pricing
model
What are the three key elements of an investment strategy? - Correct answer-an
identifiable goal, a method to attain that goal, and the competencies and resources
to sustain the strategy
What are the three categories of EMH? - Correct answer-Weak Form, Semi-Strong
form, and the strong form.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
Questions and Answers
The Asset Management Process is... - Correct answer-Gather data, Establish goals,
Analyze information, Make recommendations and implement, monitor
performance
Required Rate of return formula = - Correct answer-(e)r = Rf + (Rm-Rf)Bp
What is Excess Return ? - Correct answer-Total Portfolio Return - Risk Free Rate
Explain Jensen performance ratio? - Correct answer-This measure of performance
is a measure of absolute risk, meaning it can be used as a stand-alone measure as
apposed to a relative measure (one that compares)
Treynor ratio uses what to measure risk? - Correct answer-beta
Sharpe ratio uses what to measure risk? - Correct answer-Standard Deviation
Treynor formula? - Correct answer-Ti = Excess return / portfolio beta
Sharpe ratio formula? - Correct answer-= Total Portfolio return - Rfr / standard
deviation
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
, The Treynor ratio output shows what...? - Correct answer-It shows how much
return each fund generated per one unit of risk
Treynor measure is only appropriate for what type of portfolios? and why? -
Correct answer-fully diversified portfolios; because it uses beta as its measure of
risk, and beta is a systemic type of risk (market risk)
excess return is what? - Correct answer-total portfolio return - Rfr
T or F: Indexes assume that all dividends and distributions are reinvested. - Correct
answer-true
What is risk in terms of investing? - Correct answer-The degree of uncertainty
associated with return of an asset.
Required rate of return formula is AKA as what...? - Correct answer-CAPM pricing
model
What are the three key elements of an investment strategy? - Correct answer-an
identifiable goal, a method to attain that goal, and the competencies and resources
to sustain the strategy
What are the three categories of EMH? - Correct answer-Weak Form, Semi-Strong
form, and the strong form.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
