Exam (elaborations)
AAMS Exam Questions with Solutions
- Course
- Institution
AAMS Exam Questions with Solutions
[Show more]
Content preview
AAMS Notecardsstandard deviation - Answer Variability around the mean; a measure of total risk; absolute.
Beta - Answer Volatility relative to a benchmark; a measure of relative risk; not static
What did the Brinson study evaluate? - Answer Security selection, market timing, and asset allocation policy.
What conclusion did the Brinson study reach? - Answer More attention should be given to the asset allocation process and less given to securities selection and market timing.
What's the importance of asset allocation in a clients investment strategy? - Answer Clients must be active in determining their asset allocation and explicit about objectives, risk, and liquidity over the long term.
T-Bills average (geometric) rate of returns, as well as inflation, since 1926 - Answer 3.3%
Long-term U.S. government bonds average (geometric) rate of returns, as well as inflation, since 1926 - Answer 5.5%
Long-term corporate bonds average (geometric) rate of returns, as well as inflation, since 1926 - Answer 5.9% Intermediate-term U.S. government bonds average (geometric) rate of returns, as well as inflation, since
1926 - Answer 5.1%
Large-company stocks average (geometric) rate of returns, as well as inflation, since 1926 - Answer 10%
Small-company stocks average (geometric) rate of returns, as well as inflation, since 1926 - Answer 11.8%
Inflation average (geometric) rate of returns, as well as inflation, since 1926 - Answer 2.9%
Define strategic asset allocation - Answer The identification of the asset mix that will provide the optimal
balance between expected risk and return for a long-term investment horizon.
How is strategic asset allocation maintained? - Answer With periodic rebalancing by repositioning higher
performing assets into lower performing assets.
Define tactical asset allocation - Answer This is the use of securities selection, sector rotation, and market timing to periodically revise the asset mix of a portfolio.
Define core/satellite asset allocation - Answer This approach involves a combination of strategic and tactical asset allocation enabled by dividing a portfolio into a core holding of stocks and bonds, often broad based, low cost index mutual funds or etfs, and a satellite portion.
What are the characteristics of common stock? - Answer Shareholders receive dividends on a pro rata basis, vote on the election of corporate board members, are residual owners of the firm (meaning their interests are subordinate to creditors and bond holders), and the shares have no maturity
What are the sources of risk for common stock? - Answer A downturn in economic growth, high interest rates, loss of product or service competitiveness, failures of management, and government action
What are the characteristics of preferred stock? - Answer Dividends are usually fixed, qualified and not tax-deductible to the paying corporation, they're paid ahead of common shares, limited voting rights,
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller rosesteva. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
72964 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now