AAMS Module Quizzes (1-10) | Questions & Answers (100 %Score) Latest Updated
2024/2025 Comprehensive Questions A+ Graded Answers | With Expert Solutions
What are the major steps in the asset management process - 1. gather data
2. establish goals
3. analyze information
4. make and implement recommendations
5. monitor
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 time-framed.
The acronym to remember for goal setting is SMART, which stands for Specific, Measurable, Achievable,
Relevant, and Time-Framed. The primary flaw in this goal is that it is not time-framed. Because it is not
time-framed, it is difficult to tell if this is achievable, but it is certainly measurable and very likely
relevant.
Which one of the following is not an invested asset? - 180-day certificate of deposit
A certificate of deposit is a cash equivalent and therefore should be listed under Cash and Cash
Equivalents.
Victoria Gregory's financial situation is as follows:
Cash/cash EquivalentsL $15,000
Short Term debts: $23,000
LTDs: $140,000
Taxes: $8000
Invested Assets: $45,000
Use Assets: $192,000
What is her net worth? - $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 and its major components?
- The income statement indicates, for a certain period of time, an individual's cash inflows and outflows.
Its components include gross income, expenses, and surplus or deficit.
The income statement describes cash flow for a period of time and contains the components of gross
income, from which expenses are subtracted to determine the surplus or deficit.
All of the following provide a clearer picture of the client's needs - 1. anticipated retirement lifestyle
2. bad experiences w/ particular investments
3. succession planning in place, if any, for a client involved in ownership of small business
Which one of the following is considered a "foundation" goal? - emergency fund
An emergency fund is a "foundation" goal because it is an essential goal for survival in the event of a
dramatic life event.
Which one of the following is the better written financial goal? - to accumulate $15,000 for a boat
purchase in two years
This goal is well written because it contains a specific dollar amount and a specific time frame.
When analyzing information gathered from a client, which of the following are important factors to look
for? - 1. mismatches between the current investment position or resources and stated goals.
This is an important factor in the analysis step. Any mismatches between the client's goals and the
investment vehicles used to attain those goals should be highlighted.
2. the validity of the client's stated goals.
This is an important factor in the analysis step. If the client's goals are unrealistic, this problem needs to
be addressed immediately.
3. tax problems that might be ameliorated through investment planning.
This is an important factor in the analysis step. Potential tax problems should be addressed as part of
the investment strategy.
Marcia Simpson has analyzed her client's situation and has concluded that her client will come short of
attaining the amount of capital he would like to have by the time he plans to retire. The client is a low
risk taker and will have limited funds for future periodic investments. Before making a recommendation,
,Marcia should do which one of the following? - Discuss the problem and ask the client to clarify how he
wishes to adjust his accumulation goal, risk level, or periodic investments.
After being informed of the various constraints, implications of their decisions, and other options they
have, the client can choose to make adjustments with which he is comfortable.
Which of the following is a matter that needs to be clarified before making investment
recommendations? - 1. client's goals
2. risk parameters of the client
3. time horizons of the goals
Four main attributes of a good business plan - 1. written and shared with someone who has an interest
in your success
2. include realistic action steps and personal goals
3. professional development goals
Which of the following is the more important factor in establishing trust with a client? - demonstrating
professionalism and honesty
Demonstrating professionalism and honesty is the most important factor in establishing trust with a
client.
What are the three characteristics of a well-defined goal? - 1. purpose
2. specific dollar amount
3. defined time frame
Which one of the following is a mismatch between a client's time horizon and stated goal? - 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 62.
Seven years is not enough time for this client to amass the principal needed to support a retirement
period of 15 to 20 years (or longer).
Managing client expectations is best achieved through which of the following? - educate the client
Educating your clients is the best way to help set and manage their expectations.
, Who ultimately makes the investment decision in the asset management process? - the client
Which one of the following is not included in an investment policy statement? - which securities to
include in the portfolio
While an investment policy statement determines which types of securities may be included in a
portfolio, it does NOT make recommendations as to specific securities to purchase.
Which one of the following types of investors is concerned with losing what he or she has accumulated
in the past? - a risk-averse investor
A risk-averse investor is concerned with losing what he or she has accumulated in the past.
Which one of the following best describes the purpose of an investment policy statement (IPS)? - to
provide a foundation on which the client's portfolio is constructed, and to provide a basis for review and
adaptation to changing conditions
An investment policy statement's primary purpose is to provide broad guidelines with which to establish
a foundation for portfolio construction, and to provide a basis for periodic review.
Of the following, which one describes a key attribute of an investment policy statement? - long-term
perspective—to take advantage of the positive bias in the markets
A key attribute of an investment policy statement is that it should be created with a long-term
perspective to use the positive bias in the markets that occurs with the passage of time.
Time is of critical importance in an investment policy statement because - it determines the feasibility of
the investment professional making recommendations that meet the client's goals.
The amount of time available for a financial goal determines if the investment professional can make
recommendations that will achieve that goal.
Which of the following is a key element that all investment policy statements should contain? - An
investment policy statement should include statements regarding acceptable investment vehicles, the
portfolio's asset allocation, and the client's risk tolerance level.
