Practice Test GeeksAmerican Academy of Financial Management (AAFM) Practice Test
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AAFM Risk Management and Ethics Flashcards

7 cards from real AAFM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 AAFM Risk Management and Ethics flashcards as text

  1. Systematic risk is best described as?

    Answer: Market-wide risk that cannot be diversified away

    Systematic risk affects the entire market and cannot be eliminated by diversification.

  2. A duty to maintain professional competence under AAFM ethics means a member should?

    Answer: Engage in ongoing education to keep skills current

    Competence requires continuing professional development to keep knowledge and skills up to date.

  3. Interest rate risk most directly affects the value of which instrument?

    Answer: Fixed-income bonds

    Bond prices move inversely with interest rates, making fixed-income securities sensitive to rate changes.

  4. Enterprise Risk Management (ERM) is characterized by?

    Answer: An integrated, firm-wide view of all risks

    ERM takes a holistic, organization-wide approach to identifying and managing all significant risks.

  5. A client's risk tolerance should be assessed to ensure?

    Answer: Recommendations are suitable for their capacity and willingness to bear risk

    Matching recommendations to the client's risk tolerance and capacity is core to suitability.

  6. Placing client orders ahead of the manager's own trades to benefit the client reflects which principle?

    Answer: Priority of client transactions

    Ethical standards require client transactions to take priority over the manager's personal trades.

  7. Reputational risk to a financial firm most often results from?

    Answer: Ethical failures or negative public perception

    Reputational risk stems from misconduct, poor ethics, or events that damage stakeholder trust.