MCQ 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 MCQ flashcards as text
Which document outlines an investment fund's objectives, risks, and fees for investors?
Answer: Prospectus
A prospectus discloses a fund's objectives, risks, costs, and terms to prospective investors.
A high inventory turnover ratio generally indicates that a company:
Answer: Sells and replaces inventory efficiently
High inventory turnover signals efficient sales and inventory management.
Which type of risk arises from fluctuations in currency exchange rates?
Answer: Foreign exchange (FX) risk
FX risk stems from adverse movements in currency exchange rates affecting international transactions.
In estate planning, a 'trust' is best described as:
Answer: A legal arrangement holding assets for beneficiaries
A trust is a legal entity where a trustee holds and manages assets for named beneficiaries.
The 'efficient market hypothesis' suggests that asset prices:
Answer: Reflect all available information
The efficient market hypothesis states that prices already incorporate all publicly available information.
Return on equity (ROE) is calculated as:
Answer: Net income divided by shareholders' equity
ROE measures profitability as net income relative to shareholders' equity.
Which of the following is a defensive investment typically held during market downturns?
Answer: Government bonds
Government bonds are considered defensive assets due to their relative stability and low default risk.