AAMS Asset Management Process 3

Question 1

A manager shifts portfolio weights away from the strategic allocation to exploit a short-term market opportunity. This is best described as:

Accepted Answer

Tactical asset allocation

Answer

Tactical asset allocation involves temporary deviations from the strategic mix to capitalize on market conditions.

Question 2

Which of the following is NOT typically included in an Investment Policy Statement?

Accepted Answer

Names of specific securities to hold

Answer

An IPS establishes guidelines and objectives but does not name specific securities, which are selected during implementation.

Question 3

A client's portfolio underperforms its benchmark by 2%. The manager should first:

Accepted Answer

Analyze the sources of the performance gap

Answer

Performance attribution analysis identifies whether underperformance is due to asset allocation, security selection, or market conditions.

Question 4

The process of gathering financial data, identifying goals, and understanding a client's current situation occurs during which phase?

Accepted Answer

Data collection and goal setting

Answer

Data collection and goal setting is the foundational phase where the manager learns about the client's financial situation and objectives.

Question 5

A pension fund's asset allocation is driven primarily by its future benefit payment obligations. This approach is called:

Accepted Answer

Liability-driven investing (LDI)

Answer

Liability-driven investing structures the portfolio to match assets against future liabilities, commonly used by pension funds.

(AAMS) Accredited Asset Management Specialist Practice Test