AAMS Practice 2 Questions with Complete Answers, Graded to Pass

c Which of the following is a false statement regarding a good business plan? The plan A) is in writing. B) includes actionable steps. C) should only contain business goals. D) is shared with a mentor. c Jim Hanson's financial situation is as follows: Savings account$5,000 Life insurance cash value$20,000 Short-term debts$3,000 Mortgage loan$100,000 Auto loan$10,000 Tuition payments$17,000 Auto loan payments$3,000 Mortgage loan payments$9,600 Invested assets$40,000 Use assets$220,000 A) $127,000 B) $132,000 C) $172,000 D) $182,000 What is his net worth? AD b As of December 31, 20X1, Bill Simpson has the following financial data: Salaries$90,000 Investment income$4,000 Mortgage payments$16,000 Insurance$3,000 Auto notes$20,000 Income taxes$25,000 Auto payments$6,000 Medical/dental$4,000 Mses$15,000 Utilities$3,000 CD$5,000 Education$10,000 Food$8,000 What is Bill's surplus or deficit? A)$14,000 B)$4,000 C)$1,000 D)$7,000 b Which one of the following is the most correctly formulated goal for a client? A) invest $500 monthly using a dollar cost averaging strategy to increase net worth B) accumulate $50,000 in seven years for a son's education C) accumulate $50,000 for a second home D) build enough net worth to retire in 15 years d Which one of the following is most accurate with respect to the life insurance needs of the typical family? A) The need for insurance to cover both final expenses and lost income decreases at age 70. B) Life insurance generally allows families to reduce their income taxation exposures. C) The need for life insurance remains steady until age 65. D) Total life insurance requirements may decrease as an individual approaches retirement. d Upon retirement, the bulk of a client's assets generally should be invested in A) derivatives and other alternative investment for above-average short-term gains. B) fixed-income investments for current income and safety of principal. C) money market funds for maximum safety of principal. D) growth investments to preserve purchasing power. a One of the primary purposes of an investment policy statement is to A) provide a basis for portfolio review. B) project market returns for the portfolio. C) separate the role of the client and the investment professional. D) identify the securities to be included in the portfolio. c