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AAMS Practice Exam 2024/2025 with 100% correct answers
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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...

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  • November 2, 2024
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  • 2024/2025
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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.

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