AAMS Investment Strategies 4

Question 1

A 'barbell' fixed-income strategy concentrates holdings at which maturities?

Accepted Answer

Both short-term and long-term maturities, avoiding the middle

Answer

The barbell strategy holds securities at the short and long ends of the yield curve while avoiding intermediate maturities.

Question 2

Which strategy explicitly tilts a portfolio toward low-volatility stocks, exploiting the empirical finding that lower-risk stocks often produce higher risk-adjusted returns?

Accepted Answer

Low-volatility or minimum-variance factor strategy

Answer

Low-volatility factor strategies overweight stocks with historically lower price fluctuations, which research shows can outperform on a risk-adjusted basis.

Question 3

Dollar-cost averaging (DCA) reduces which specific investment risk compared to lump-sum investing?

Accepted Answer

Timing risk of investing a large sum at a market peak

Answer

DCA spreads purchases over time, reducing the danger of deploying a large sum right before a market decline.

Question 4

What distinguishes a 'growth at a reasonable price' (GARP) strategy from pure growth investing?

Accepted Answer

GARP combines growth criteria with valuation constraints to avoid overpaying

Answer

GARP seeks companies with strong growth prospects but also screens for reasonable valuation, blending growth and value disciplines.

Question 5

A risk parity portfolio weights asset classes by:

Accepted Answer

Equal contribution to overall portfolio risk rather than equal dollar weight

Answer

Risk parity allocates so that each asset class contributes equally to total portfolio volatility, often resulting in larger allocations to bonds than equities.

(AAMS) Accredited Asset Management Specialist Practice Test

(AAMS) Accredited Asset Management Specialist Practice Test

AAMS Investment Strategies 4