AAMS Practice Exam
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? correct answersVariable 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 correct
answerscontrarian
As of December 31, 20X1, Bob Larkin has the following financial data:
Bond fund $17,000
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? correct answers$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
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? correct answers$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
Which one of the following statements comparing the suitability and fiduciary standards is correct?
correct answersLegally, suitability disputes are often resolved in arbitration whereas fiduciary disputes
are ultimately resolved in the courts.
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? correct answersVariable 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 correct
answerscontrarian
As of December 31, 20X1, Bob Larkin has the following financial data:
Bond fund $17,000
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? correct answers$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
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? correct answers$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
Which one of the following statements comparing the suitability and fiduciary standards is correct?
correct answersLegally, suitability disputes are often resolved in arbitration whereas fiduciary disputes
are ultimately resolved in the courts.
