AAMS - ACCREDITED ASSET MANAGEMENT
SPECIALIST EXAM 2024-2025 WITH 380 ACTUAL
EXAM QUESTIONS WITH 100% CORRECT
DETAILED ANSWERS/ AAMS EXAM TEST BANK
2024 (NEWEST!)
Which one of the following statements comparing the suitability and fiduciary
standards is correct? - ANSWER-Legally, suitability disputes are often resolved in
arbitration whereas fiduciary disputes are ultimately resolved in the courts.
Which one of the following types of distributions from a qualified retirement plan
may be subject to mandatory 20% withholding? - ANSWER-indirect rollover
Which one of the following statements regarding a qualified plan is correct? -
ANSWER-The employer's deduction is available in the year that a contribution is
made.
An employer plans to use corporate-owned life insurance to informally fund a
nonqualified deferred compensation agreement and wants flexibility regarding
investment choices. Which one of the following types of life insurance should this
employer choose? - ANSWER-Variable life insurance
The latest economic reports have been gloomy, and the stock market is in a
protracted slump. Most of your regular stock customers are selling out their
positions. A new client, Mr. Jones, sees these conditions as a buying opportunity.
You would define his investment personality as - ANSWER-contrarian
As of December 31, 20X1, Bob Larkin has the following financial data:
Bond fund $17,000
pg. 1
,Residence$400,000
Vested 401(k) plan$95,000
Auto notes$16,000
Residence mortgage$285,000
Auto payments$7,000
Automobiles$45,000
Checking account$8,000
Utilities$4,000
CD$15,000
Stock$125,000
Home equity loan$40,000
What is Bob's net worth? - ANSWER- $364,000
Assets = $17,000 + $400,000 + $95,000 +$45,000 + $8,000 + $15,000 + $125,000
= $705,000. Liabilities = $16,000 + $285,000 + $40,000 = $341,000, so net worth
is $364,000. Notice that auto notes of $16,000 are included in this calculation, but
auto payments of $7,000 is a cash flow item and therefore not included.
For the year ending December 31, 20X2, Ted Jones has the following financial
information:
Salaries$70,000
Auto payments$5,000
Insurance$3,800
Food$8,000
Credit card balance$10,000
pg. 2
,Dividends$1,100
Utilities$3,500
Mortgage payments$14,000
Taxes$13,000
Clothing$9,000
Interest income$2,100
Checking account$4,000
Vacations$8,400
Donations$5,800
What is the surplus or (deficit) for Ted? - ANSWER- $2,700
Income = $70,000 + $1,100 + $2,100 = $73,200. Expenses = $5,000 + $3,800 +
$8,000 + $3,500 + $14,000 + $13,000 + $9,000 + $8,400 + $5,800 = $70,500, so
there is a surplus of $2,700
All of the following should be agreed upon between the client and the investment
professional when making recommendations based on an investment policy
statement EXCEPT - ANSWER-specific investments.
Which of the following has a direct bearing on which investments are appropriate
for achieving a goal? - ANSWER-the investor's time horizon
One purpose of an investment policy statement is to - ANSWER-provide
guidelines around which the portfolio is to be constructed and managed.
Which of the following are elements of any investment policy statement?
pg. 3
, I. the client's investment goal
II. suitable and unsuitable investment vehicles
III. an acceptable risk level
IV. a provision for periodic review - ANSWER-D)
I, II, III, and IV
As the investment policy statement formulation moves to policy implementation,
the - ANSWER-A)
investment professional takes a leading role.
An investor notices that technology stocks are in a strong bull market and wants to
take advantage of it. Even though valuations are at record high levels, he buys a
technology stock that a brokerage firm is recommending. Which one of the
following is the investor demonstrating? - ANSWER-C) rationalization
One change in a client's situation that would require an adjustment in the asset
management process would be - ANSWER-a sudden early retirement from
employment.
Dan has bonds maturing in two weeks. Since he bought the bonds, interest rates
have fallen. Dan's bonds are most likely subject to which one of the following
risks? - ANSWER-reinvestment risk
Jim Wilson has a $20,000 portfolio of four different stocks. The distribution of this
capital and the betas of these stocks are shown below.
% of Portfolio Value/ Beta
Stock A 10% 1.10
pg. 4
SPECIALIST EXAM 2024-2025 WITH 380 ACTUAL
EXAM QUESTIONS WITH 100% CORRECT
DETAILED ANSWERS/ AAMS EXAM TEST BANK
2024 (NEWEST!)
Which one of the following statements comparing the suitability and fiduciary
standards is correct? - ANSWER-Legally, suitability disputes are often resolved in
arbitration whereas fiduciary disputes are ultimately resolved in the courts.
Which one of the following types of distributions from a qualified retirement plan
may be subject to mandatory 20% withholding? - ANSWER-indirect rollover
Which one of the following statements regarding a qualified plan is correct? -
ANSWER-The employer's deduction is available in the year that a contribution is
made.
An employer plans to use corporate-owned life insurance to informally fund a
nonqualified deferred compensation agreement and wants flexibility regarding
investment choices. Which one of the following types of life insurance should this
employer choose? - ANSWER-Variable life insurance
The latest economic reports have been gloomy, and the stock market is in a
protracted slump. Most of your regular stock customers are selling out their
positions. A new client, Mr. Jones, sees these conditions as a buying opportunity.
You would define his investment personality as - ANSWER-contrarian
As of December 31, 20X1, Bob Larkin has the following financial data:
Bond fund $17,000
pg. 1
,Residence$400,000
Vested 401(k) plan$95,000
Auto notes$16,000
Residence mortgage$285,000
Auto payments$7,000
Automobiles$45,000
Checking account$8,000
Utilities$4,000
CD$15,000
Stock$125,000
Home equity loan$40,000
What is Bob's net worth? - ANSWER- $364,000
Assets = $17,000 + $400,000 + $95,000 +$45,000 + $8,000 + $15,000 + $125,000
= $705,000. Liabilities = $16,000 + $285,000 + $40,000 = $341,000, so net worth
is $364,000. Notice that auto notes of $16,000 are included in this calculation, but
auto payments of $7,000 is a cash flow item and therefore not included.
For the year ending December 31, 20X2, Ted Jones has the following financial
information:
Salaries$70,000
Auto payments$5,000
Insurance$3,800
Food$8,000
Credit card balance$10,000
pg. 2
,Dividends$1,100
Utilities$3,500
Mortgage payments$14,000
Taxes$13,000
Clothing$9,000
Interest income$2,100
Checking account$4,000
Vacations$8,400
Donations$5,800
What is the surplus or (deficit) for Ted? - ANSWER- $2,700
Income = $70,000 + $1,100 + $2,100 = $73,200. Expenses = $5,000 + $3,800 +
$8,000 + $3,500 + $14,000 + $13,000 + $9,000 + $8,400 + $5,800 = $70,500, so
there is a surplus of $2,700
All of the following should be agreed upon between the client and the investment
professional when making recommendations based on an investment policy
statement EXCEPT - ANSWER-specific investments.
Which of the following has a direct bearing on which investments are appropriate
for achieving a goal? - ANSWER-the investor's time horizon
One purpose of an investment policy statement is to - ANSWER-provide
guidelines around which the portfolio is to be constructed and managed.
Which of the following are elements of any investment policy statement?
pg. 3
, I. the client's investment goal
II. suitable and unsuitable investment vehicles
III. an acceptable risk level
IV. a provision for periodic review - ANSWER-D)
I, II, III, and IV
As the investment policy statement formulation moves to policy implementation,
the - ANSWER-A)
investment professional takes a leading role.
An investor notices that technology stocks are in a strong bull market and wants to
take advantage of it. Even though valuations are at record high levels, he buys a
technology stock that a brokerage firm is recommending. Which one of the
following is the investor demonstrating? - ANSWER-C) rationalization
One change in a client's situation that would require an adjustment in the asset
management process would be - ANSWER-a sudden early retirement from
employment.
Dan has bonds maturing in two weeks. Since he bought the bonds, interest rates
have fallen. Dan's bonds are most likely subject to which one of the following
risks? - ANSWER-reinvestment risk
Jim Wilson has a $20,000 portfolio of four different stocks. The distribution of this
capital and the betas of these stocks are shown below.
% of Portfolio Value/ Beta
Stock A 10% 1.10
pg. 4
