AAFM Study Guide 2026
Everything you need to pass the AAFM exam in one place: the exam format, every topic to study, real practice questions with explanations, flashcards, and full-length practice tests. Free, no sign-up needed.
📋 AAFM Exam Format at a Glance
📚 AAFM Topics to Study (43)
✍️ Sample AAFM Questions & Answers
1. Which client profiling dimension measures the financial capacity to absorb losses without affecting lifestyle?
Risk capacity refers to the objective, financial ability to withstand investment losses based on income, assets, time horizon, and liabilities.
2. During data gathering, which item is an example of quantitative rather than qualitative information?
Quantitative data are measurable numbers such as income, while attitudes are qualitative.
3. What does the Sharpe ratio measure?
The Sharpe ratio divides excess return by standard deviation to gauge return earned per unit of risk.
4. Which statement best describes a fiduciary standard of care?
A fiduciary must place the client's interests ahead of their own at all times.
5. Which estate planning strategy involves creating a trust where the charity receives an annuity first and the remainder passes to family heirs?
A charitable lead annuity trust (CLAT) pays a fixed annuity to a charity for a specified term, after which the remaining assets pass to non-charitable beneficiaries such as children.
6. What is the primary financial purpose of a stock buyback (share repurchase program)?
Share repurchases return excess capital to shareholders by reducing shares outstanding, which typically boosts earnings per share and can signal management's confidence in the company's value.