AAMS COMPREHENSIVE EXAM 2026 SOLVED
QUESTIONS GRADED A+
◉ Required Rate of return formula = Answer: (e)r = Rf + (Rm-Rf)Bp
◉ What is Excess Return ? Answer: Total Portfolio Return - Risk Free
Rate
◉ Explain Jensen performance ratio? 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? Answer: beta
◉ Sharpe ratio uses what to measure risk? Answer: Standard Deviation
◉ Treynor formula? Answer: Ti = Excess return / portfolio beta
◉ Sharpe ratio formula? Answer: = Total Portfolio return - Rfr / standard
deviation
, ◉ The Treynor ratio output shows what...? 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? 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? Answer: total portfolio return - Rfr
◉ T or F: Indexes assume that all dividends and distributions are
reinvested. Answer: true
◉ What is risk in terms of investing? Answer: The degree of uncertainty
associated with return of an asset.
◉ Required rate of return formula is AKA as what...? Answer: CAPM
pricing model
◉ What are the three key elements of an investment strategy? 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? Answer: Weak Form, Semi-
Strong form, and the strong form.
QUESTIONS GRADED A+
◉ Required Rate of return formula = Answer: (e)r = Rf + (Rm-Rf)Bp
◉ What is Excess Return ? Answer: Total Portfolio Return - Risk Free
Rate
◉ Explain Jensen performance ratio? 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? Answer: beta
◉ Sharpe ratio uses what to measure risk? Answer: Standard Deviation
◉ Treynor formula? Answer: Ti = Excess return / portfolio beta
◉ Sharpe ratio formula? Answer: = Total Portfolio return - Rfr / standard
deviation
, ◉ The Treynor ratio output shows what...? 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? 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? Answer: total portfolio return - Rfr
◉ T or F: Indexes assume that all dividends and distributions are
reinvested. Answer: true
◉ What is risk in terms of investing? Answer: The degree of uncertainty
associated with return of an asset.
◉ Required rate of return formula is AKA as what...? Answer: CAPM
pricing model
◉ What are the three key elements of an investment strategy? 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? Answer: Weak Form, Semi-
Strong form, and the strong form.
