AAMS Exam Questions & Answers 2025 Questions A+ Graded
Answers
All of the following are major steps in the asset management process except
A) Making and implementing recommendations
B) Gathering Data
C) Establishing Goals
D) Establishing an asset allocation policy − D) Establishing an asset allocation policy
Stefan's business plan includes the following goal: "I will contact 50 prospective clients and document this
activity in the CRM for tracking purposes."
Which primary element of a good goal is missing? This goal is not
A) achievable.
B )relevant.
C) time−framed.
D) specific. − C) time−framed.
The acronym to remember for goal setting is S.M.A.R.T, which stands for Specific, Measurable, Achievable,
Relevant, and Time−Framed. The flaw in this goal is that it is not time−framed
Which one of the following is NOT an invested asset?
A) Real estate investment trust
B) 401(k) account
C) 180−day certificate of deposit
D) Individual brokerage account − C) 180−day certificate of
deposit Victoria Gregory's financial situation is as follows:
Cash/cash equivalents$15,000 Short−term debts$23,000
Long−term debts$140,000 Taxes$8,000
Invested assets$45,000 Use assets$192,000
What is her net worth?
A) $112,000
B) $89,000
C) $81,000
D) $252,000 − B) $89,000
Assets = Cash/cash equivalents + Invested assets + Use assets ($15,000 + $45,000 + $192,000 =
$252,000). Liabilities = Short−term debts + Long−term debts ($23,000 + $140,000 = $163,000). Assets −
Liabilities = Net Worth, so $252,000 − $163,000 = $89,000.
,Which one of the following statements best describes the income statement?
A) The income statement indicates, as of a definite date, the client's receipts and disbursements.
B) The income statement indicates, as of a definite date, what an individual owns and owes.
C) The income statement indicates, for a certain period of time, the growth of a client's assets
and liabilities.
D) The income statement indicates, for a certain period of time, an individual's cash inflows and
outflows. − D) The income statement indicates, for a certain period of time, an individual's cash inflows
and outflows.
All of the following provide a clearer picture of the client's needs except
A) anticipated retirement lifestyle.
B) the current rate of inflation.
C) bad experiences with particular investments.
D) Succession planning in place for a client involved in ownership of a small business. − B) the
current rate of inflation.
The current rate of inflation does not specifically provide insight into a client's needs, although the rate of
future inflation anticipated by the client will have an impact on the client's future needs.
Which one of the following is considered a "foundation" goal?
A) College funding
B) Emergency fund
C) Mortgage payoff
D) Retirement savings − B) Emergency fund
Which one of these is the best written financial goal?
A) Acquire $300,000 for retirement
B) Accumulate $15,000 for a boat purchase in two years
C) Make money in the stock market
D) Establish a fund for purchasing a second home in five years − B) Accumulate $15,000 for a
boat purchase in two years
What is the appropriate date to identify the statement of financial position of a calendar−year client for
the year 20XX?
A) At December 31, 20XX
B) For the period beginning January 1, 20XX
C) For the period from January 1 to Decemebr 31, 20XX
D) At January 1, 20X1 − A) At December 31, 20XX
How are assets valued on a statement of financial position?
A) Residual value
B) Actual cash value
C) Replacement value
D) Fair market value − D) Fair market value
All of these are topics that needs to be clarified before making investment recommendations except
,A) the client's goals.
B) risk parameters of the client.
C) basis for portfolio review.
D) time horizons of the goals. − C) basis for portfolio review.
All of these are attributes of a good business plan except the plan
A) is written.
B) only includes business−related goals.
C) includes realistic action steps.
D) is shared with someone. − B) only includes business−related goals.
When the personal circumstances of a client change, which asset management step does the investment
professional return to?
A) Analyzing information
B) Monitoring performance
C) Implementing recommendations
D) Data gathering − D) Data gathering
Which of these is the most important factor in establishing trust with a client?
A) Speaking with confidence
B) Demonstrating professionalism and honesty
C) Having a pleasant manner
D) Demonstrating knowledge − B) Demonstrating professionalism and honesty
Which one of these is NOT one of the three characteristics of a well−defined goal?
A) Dollar amount
B) Purpose
C) Realistic
D) Time frame − C) Realistic
Which one of these is a mismatch between a client's time horizon and stated goal?
A) A client with no current savings who has a one−year−old son says that saving for her son's
college education is her top priority.
B) A 55−year−old client with no current retirement savings says that saving for retirement is her
top priority; she plans to retire at age 65.
C) A prospective client with a sizable amount of liquid assets wishes to purchase a recreational
vehicle within seven years.
D) A professional, age 30, begins to contribute to a Roth IRA for her retirement. − B) A
55−year−old client with no current retirement savings says that saving for retirement is her top
priority; she plans to retire at age 65.
Managing client expectations is best achieved by
A) downplaying client concerns.
B) presenting research to the client.
C) educating the client.
D) using past performance to reassure clients. − C) educating the client.
, In the asset management process, who ultimately makes the investment decision?
A) The client
B) The client and adviser equally
C) The compliance department
D) The adviser − A) The client
Which one of these is NOT included in an investment policy statement?
A) Which securities to include in the portfolio
B) An expected rate of return
C) The level of risk that may be taken
D) Which types of securities to include in the portfolio − B) An expected rate of return
Which one of these types of investors is most concerned with losing what they have accumulated in their
investment portfolio?
A) A risk tolerant investor
B) A contrarian investor
C) A follower investor
D) A risk−averse investor − D) A risk−averse investor
Which one of the following best describes the purpose of an investment policy statement (IPS)?
A) to select the individual assets, and to make an estimate of their individual rates of return
B) to educate the client about the relative performance of different asset classes, and to form
a baseline for performance
C) to provide a foundation on which the client's portfolio is constructed, and to provide a basis
for review and adaptation to changing conditions
D) to acquaint the investment professional with the client's financial situation, and to determine
the timing of acquisitions and sales − C) to provide a foundation on which the client's portfolio is
constructed, and to provide a basis for review and adaptation to changing conditions
Of the following, which one describes a key attribute of an investment policy statement?
A) specific−detail of how to manage the portfolio, including specific securities to be purchased
B) flexible−decisions on securities are left to the investment professional's discretion, based on
the investment policy statement
C) long−term perspective−to take advantage of the positive bias in the markets
D) adviser driven−the investment adviser determines the elements of an investment policy
statement with the consent of the client − C) long−term perspective−to take advantage of the positive
bias in the markets
Time is of critical importance in an investment policy statement because
A) it determines the feasibility of the investment professional making recommendations that meet
the client's goals.
B) the current market and economic climates set client expectations for portfolio performance.
C) market timing is essential to investment performance.
D) an investor's life expectancy determines the time horizon for a portfolio. − A) it determines
the feasibility of the investment professional making recommendations that meet the client's goals.
Answers
All of the following are major steps in the asset management process except
A) Making and implementing recommendations
B) Gathering Data
C) Establishing Goals
D) Establishing an asset allocation policy − D) Establishing an asset allocation policy
Stefan's business plan includes the following goal: "I will contact 50 prospective clients and document this
activity in the CRM for tracking purposes."
Which primary element of a good goal is missing? This goal is not
A) achievable.
B )relevant.
C) time−framed.
D) specific. − C) time−framed.
The acronym to remember for goal setting is S.M.A.R.T, which stands for Specific, Measurable, Achievable,
Relevant, and Time−Framed. The flaw in this goal is that it is not time−framed
Which one of the following is NOT an invested asset?
A) Real estate investment trust
B) 401(k) account
C) 180−day certificate of deposit
D) Individual brokerage account − C) 180−day certificate of
deposit Victoria Gregory's financial situation is as follows:
Cash/cash equivalents$15,000 Short−term debts$23,000
Long−term debts$140,000 Taxes$8,000
Invested assets$45,000 Use assets$192,000
What is her net worth?
A) $112,000
B) $89,000
C) $81,000
D) $252,000 − B) $89,000
Assets = Cash/cash equivalents + Invested assets + Use assets ($15,000 + $45,000 + $192,000 =
$252,000). Liabilities = Short−term debts + Long−term debts ($23,000 + $140,000 = $163,000). Assets −
Liabilities = Net Worth, so $252,000 − $163,000 = $89,000.
,Which one of the following statements best describes the income statement?
A) The income statement indicates, as of a definite date, the client's receipts and disbursements.
B) The income statement indicates, as of a definite date, what an individual owns and owes.
C) The income statement indicates, for a certain period of time, the growth of a client's assets
and liabilities.
D) The income statement indicates, for a certain period of time, an individual's cash inflows and
outflows. − D) The income statement indicates, for a certain period of time, an individual's cash inflows
and outflows.
All of the following provide a clearer picture of the client's needs except
A) anticipated retirement lifestyle.
B) the current rate of inflation.
C) bad experiences with particular investments.
D) Succession planning in place for a client involved in ownership of a small business. − B) the
current rate of inflation.
The current rate of inflation does not specifically provide insight into a client's needs, although the rate of
future inflation anticipated by the client will have an impact on the client's future needs.
Which one of the following is considered a "foundation" goal?
A) College funding
B) Emergency fund
C) Mortgage payoff
D) Retirement savings − B) Emergency fund
Which one of these is the best written financial goal?
A) Acquire $300,000 for retirement
B) Accumulate $15,000 for a boat purchase in two years
C) Make money in the stock market
D) Establish a fund for purchasing a second home in five years − B) Accumulate $15,000 for a
boat purchase in two years
What is the appropriate date to identify the statement of financial position of a calendar−year client for
the year 20XX?
A) At December 31, 20XX
B) For the period beginning January 1, 20XX
C) For the period from January 1 to Decemebr 31, 20XX
D) At January 1, 20X1 − A) At December 31, 20XX
How are assets valued on a statement of financial position?
A) Residual value
B) Actual cash value
C) Replacement value
D) Fair market value − D) Fair market value
All of these are topics that needs to be clarified before making investment recommendations except
,A) the client's goals.
B) risk parameters of the client.
C) basis for portfolio review.
D) time horizons of the goals. − C) basis for portfolio review.
All of these are attributes of a good business plan except the plan
A) is written.
B) only includes business−related goals.
C) includes realistic action steps.
D) is shared with someone. − B) only includes business−related goals.
When the personal circumstances of a client change, which asset management step does the investment
professional return to?
A) Analyzing information
B) Monitoring performance
C) Implementing recommendations
D) Data gathering − D) Data gathering
Which of these is the most important factor in establishing trust with a client?
A) Speaking with confidence
B) Demonstrating professionalism and honesty
C) Having a pleasant manner
D) Demonstrating knowledge − B) Demonstrating professionalism and honesty
Which one of these is NOT one of the three characteristics of a well−defined goal?
A) Dollar amount
B) Purpose
C) Realistic
D) Time frame − C) Realistic
Which one of these is a mismatch between a client's time horizon and stated goal?
A) A client with no current savings who has a one−year−old son says that saving for her son's
college education is her top priority.
B) A 55−year−old client with no current retirement savings says that saving for retirement is her
top priority; she plans to retire at age 65.
C) A prospective client with a sizable amount of liquid assets wishes to purchase a recreational
vehicle within seven years.
D) A professional, age 30, begins to contribute to a Roth IRA for her retirement. − B) A
55−year−old client with no current retirement savings says that saving for retirement is her top
priority; she plans to retire at age 65.
Managing client expectations is best achieved by
A) downplaying client concerns.
B) presenting research to the client.
C) educating the client.
D) using past performance to reassure clients. − C) educating the client.
, In the asset management process, who ultimately makes the investment decision?
A) The client
B) The client and adviser equally
C) The compliance department
D) The adviser − A) The client
Which one of these is NOT included in an investment policy statement?
A) Which securities to include in the portfolio
B) An expected rate of return
C) The level of risk that may be taken
D) Which types of securities to include in the portfolio − B) An expected rate of return
Which one of these types of investors is most concerned with losing what they have accumulated in their
investment portfolio?
A) A risk tolerant investor
B) A contrarian investor
C) A follower investor
D) A risk−averse investor − D) A risk−averse investor
Which one of the following best describes the purpose of an investment policy statement (IPS)?
A) to select the individual assets, and to make an estimate of their individual rates of return
B) to educate the client about the relative performance of different asset classes, and to form
a baseline for performance
C) to provide a foundation on which the client's portfolio is constructed, and to provide a basis
for review and adaptation to changing conditions
D) to acquaint the investment professional with the client's financial situation, and to determine
the timing of acquisitions and sales − C) to provide a foundation on which the client's portfolio is
constructed, and to provide a basis for review and adaptation to changing conditions
Of the following, which one describes a key attribute of an investment policy statement?
A) specific−detail of how to manage the portfolio, including specific securities to be purchased
B) flexible−decisions on securities are left to the investment professional's discretion, based on
the investment policy statement
C) long−term perspective−to take advantage of the positive bias in the markets
D) adviser driven−the investment adviser determines the elements of an investment policy
statement with the consent of the client − C) long−term perspective−to take advantage of the positive
bias in the markets
Time is of critical importance in an investment policy statement because
A) it determines the feasibility of the investment professional making recommendations that meet
the client's goals.
B) the current market and economic climates set client expectations for portfolio performance.
C) market timing is essential to investment performance.
D) an investor's life expectancy determines the time horizon for a portfolio. − A) it determines
the feasibility of the investment professional making recommendations that meet the client's goals.
