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AAFM CWM_LEVEL_2 Chartered Wealth Manager (CWM) Certification Level II Examination Exam Practice Test

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Total 1259 questions

Chartered Wealth Manager (CWM) Certification Level II Examination Questions and Answers

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Question 1

Section B (2 Mark)

An employee who is not resident in the UK will be liable to UK income tax:

Options:

A.

On all employment income arising both from duties performed in the UK and from duties performed overseas (on the receipts basis)

B.

On all employment income arising both from duties performed in the UK and from duties performed overseas (on the remittance basis)

C.

On employment income arising from duties performed in the UK (on the receipts basis) and on employment income arising from duties performed overseas (on the remittance basis)

D.

On employment income arising only from duties performed in the UK (on the receipts basis)

Question 2

Section C (4 Mark)

Read the senario and answer to the question.

Calculate income from House property for Mr. Keshav for assessment year 2010-11.

Options:

A.

67200

B.

46912

C.

82800

D.

7800

Question 3

Section C (4 Mark)

Suppose Gaurav, an investor, is looking to add to his portfolio and hears about a potential investment through a friend, Hitesh, at a local coffee shop. The conversation goes something like this:

GAURAV: Hi, Hitesh. My portfolio is really suffering right now. I could use a good long-term investment. Any ideas?

HITESH: Well, Gaurav, did you hear about the new IPO [initial public offering] pharmaceutical company called Pharma Growth (PG) that came out last week? PG is a hot new company that should be a great investment. Its president and CEO was a mover and shaker at an Internet company that did great during the tech boom, and she has Pharma Growth growing by leaps and bounds.

GAURAV: No, I didn’t hear about it. Tell me more.

HITESH: Well, the company markets a generic drug sold over the Internet for people with a stomach condition that millions of people have. PG offers online advice on digestion and stomach health, and several Wall Street firms have issued “buy” ratings on the stock.

GAURAV: Wow, sounds like a great investment!

HITESH: Well, I bought some. I think it could do great.

GAURAV: I’ll buy some, too.

Gaurav proceeds to pull out his cell phone, call his broker, and place an order for 100 shares of PG.

Which of the following biases have been exhibited by Gaurav?

Options:

A.

Representative bias

B.

Base Rate Neglect Bias

C.

Framing bias

D.

Loss Aversion bias

Question 4

Section B (2 Mark)

Amount of liability of payment of gratuity is calculated at the rate of

Options:

A.

One month’s wage for each completed year of service

B.

20days wages for each completed year of service

C.

Half a month’s wage for each completed year of service

D.

15 day’s wage for each completed year of service

Question 5

Section C (4 Mark)

As a CWM you are required to calculate the tax liability of an individual whose Taxable income is:

• $125000 in US dollars and he is a US citizen (single individual)

• $109000 in SGD and he is a citizen of Singapore

Options:

A.

27450.10 USD and 14780 SGD

B.

28460.50 USD and 15680 SGD

C.

24580.50 USD and 16100 SGD

D.

26480 USD and 15870 SGD

Question 6

Section A (1 Mark)

Company J and Company K each recently reported the same earnings per share (EPS). Company J’s stock, however, trades at a higher price. Which of the following statements is most correct?

Options:

A.

Company J must have a higher P/E ratio.

B.

Company J must have a higher market to book ratio.

C.

Company J must be riskier.

D.

Company J must have fewer growth opportunities.

Question 7

Section B (2 Mark)

You have been asked to estimate the market value of an apartment complex that is producing annual net operating income of Rs44,500. Four highly similar and competitive apartment properties within two blocks of the subject property have sold in the past three months. All four offer essentially the same amenities and services as the subject. All were open-market transactions with similar terms of sale. All were financed with 30-year fixed-rate mortgages using 70 percent debt and 30 percent equity. The sale prices and estimated first-year net operating incomes were as follows:

What is the indicated value of the property using direct capitalization?

Options:

A.

Rs 3,30,000

B.

Rs 3,90,351

C.

Rs3,75,000

D.

Rs 3,57,000

Question 8

Section C (4 Mark)

Your company had the following balance sheet and income statement information for 2003:

The industry average inventory turnover is 5. You think you can change your inventory control system so as to cause your turnover to equal the industry average, and this change is expected to have no effect on either sales or cost of goods sold. The cash generated from reducing inventories will be used to buy tax-exempt securities which have a 7 percent rate of return. What will your profit margin be after the change in inventories is reflected in the income statement?

Options:

A.

2.10%

B.

2.40%

C.

4.50%

D.

5.30%

Question 9

Section A (1 Mark)

Single men trade far more often than women. This is due to greater ________ among men.

Options:

A.

Framing

B.

Regret avoidance

C.

Overconfidence

D.

Conservatism

Question 10

Section B (2 Mark)

Which of the following statements is / are correct?

Options:

A.

I, II and III

B.

I and III

C.

II and IV

D.

All of the above

Question 11

Section C (4 Mark)

Read the senario and answer to the question.

Calculate the Net Worth of Mr. Adhikari as on 31/03/2009.

Options:

A.

Rs. 46,01,284

B.

Rs. 47,80,688

C.

Rs. 43,26,785

D.

Rs. 46,83,785

Question 12

Section B (2 Mark)

A person is treated as being UK resident for a tax year if he or she is physically present in the UK for at least ___ days in the year or makes regular visits to the UK averaging at least ___ days per year. Fill in the blanks.

Options:

A.

183, 91

B.

91, 183

C.

182, 90

D.

90, 182

Question 13

Section C (4 Mark)

Medicon is one the world's largest manufacturer of implantable biomedical devices, reported earnings per share in 1993 of Rs3.95, and paid dividends per share of Rs0.68. Its earnings are expected to grow 16% from 1994 to 1998, but the growth rate is expected to decline each year after that to a stable growth rate of 6% in 2003. The payout ratio is expected to remain unchanged from 1994 to 1998, after which it will increase each year to reach 60% in steady state. The stock is expected to have a beta of 1.25 from 1994 to 1998, after which the beta will decline each year to reach 1.00 by the time the firm becomes stable. (The Risk Free rate is 6.25%.)

Estimate the value per share, using the three-stage dividend discount model.

Options:

A.

Rs 47.49

B.

Rs 57.36

C.

Rs 35.51

D.

Rs 64.75

Question 14

Section B (2 Mark)

Withholding Tax Rates for payments made to Non-Residents are determined by the Finance Act passed by the Parliament for various years. The current rates for Interest are:

Options:

A.

10

B.

15

C.

20

D.

12

Question 15

Section A (1 Mark)

H Ltd, a UK resident company, owns 100% of the share capital of two other UK companies and 80% of the share capital of T SA, a company resident in Italy.H Ltd has three associated companies.

Options:

A.

TRUE

B.

FALSE

Question 16

Section A (1 Mark)

Which portion of his property can a muslim normally be guest according to muslim personal law?

Options:

A.

One Fourth

B.

One Third

C.

Half

D.

Fully

Question 17

Section A (1 Mark)

_____________ is the transfer of the balance of an existing home loan that you availed at a higher rate of interest (ROI) to either the same HFC or another HFC at the current ROI a lower rate of interest.

Options:

A.

Refinance Loans

B.

Balance Transfer Loans

C.

Home Conversion Loans

D.

Home Extension Loans

Question 18

Section A (1 Mark)

With regard to hedge funds, ‘2 and 20’ is best explained as:

Options:

A.

2 year lock-up and 20 per cent commission

B.

2 per cent annual fee and 20 per cent performance fee

C.

2 per cent commission and 20 month lock-up

D.

2 per cent performance fee and $20m high-water mark

Question 19

Section A (1 Mark)

One of the tax exemption under avoidance of Double Taxation is U/S Sec 10(6)(ii) for exemption on income received by the diplomats, ambassador, etc

Options:

A.

TRUE

B.

FALSE

Question 20

Section B (2 Mark)

Retiring early will ____________ the accumulation phase while ____________ the retirement phase

Options:

A.

Longer, shorter

B.

Shorter, longer

C.

Longer, longer

D.

Shorter, shorter

Question 21

Section C (4 Mark)

Which of the following would you consider the best indicator of an undervalued firm?

Options:

A.

I,III and IV

B.

II, IV

C.

Only V

D.

Only III

Question 22

Section C (4 Mark)

The Meryl Corporation's common stock is currently selling at Rs100 per share, which represents a P/E ratio of 10. If the firm has 100 shares of common stock outstanding, a return on equity of 20 percent, and a debt ratio of 60 percent, what is its return on total assets (ROA)?

Options:

A.

8.00%

B.

10.00%

C.

12.00%

D.

16.70%

Question 23

Section A (1 Mark)

__________ is a tangible company asset that can (and should) be inventoried and managed.

Options:

A.

Geographical information

B.

Customer information

C.

Product information

D.

All of the given options

Question 24

Section B (2 Mark)

The _________ is a plot of __________.

Options:

A.

CML , individual stocks and efficient portfolios

B.

CML and both efficient and inefficient portfolios, only

C.

SML and individual securities and efficient portfolios

D.

SML and individual securities, inefficient portfolios, and efficient portfolios.

Question 25

Section B (2 Mark)

A collar with a net outlay of approximately zero is an options strategy that

Options:

A.

Combines a put and a call to lock in a price range for a security.

B.

Uses the gains from sale of a call to purchase a put.

C.

Uses the gains from sale of a put to purchase a call.

D.

Both A and B.

Question 26

Section B (2 Mark)

Profitability Index is

Options:

A.

Present value of future cash flows / present value of initial investment

B.

Present value of future cash flows / future value of initial investment

C.

Future value of cash flows / present value of initial investment

D.

None of the above

Question 27

Section A (1 Mark)

Data for five comparable income properties that sold recently are shown below:

What is the indicated overall rate (RO)?

Options:

A.

9.54

B.

10.05

C.

11.5

D.

12.25

Question 28

Section A (1 Mark)

Income from which trust is added to the beneficiary’s taxable income?

Options:

A.

Private trust

B.

Charitable

C.

Religious

D.

None of the above

Question 29

Section B (2 Mark)

The lesson from the credit crisis of 2007-2009 is that securitized assets and credit swaps are:

Options:

A.

Complex financial instruments

B.

Difficult to correctly value and measure in terms of risk exposure

C.

Possible to set in motion a financial contagion that cannot be easily stopped without active government intervention

D.

All of the above are correct

Question 30

Section A (1 Mark)

Long-term cash flow improvement may not be achieved by

Options:

A.

Increasing equity capital

B.

Reducing capital expenditure

C.

Increasing long-term liabilities

D.

Reducing long-term debt

Question 31

Section B (2 Mark)

To pay for new equipment with a cash price of Rs7500, you need to borrow at 5.3% compounded monthly, then make monthly payments for 32 months. How many fewer months would it take to pay back the loan if you had also saved Rs600 to pay at the end?

Options:

A.

29.76 months

B.

27.20 months

C.

2.26 months

D.

4.80 months

Question 32

Section A (1 Mark)

Real Estate market in India is __________

Options:

A.

Unorganized

B.

Highly Organized

C.

Is free from government control

D.

Offers homogeneous product

Question 33

Section A (1 Mark)

Any property inherited by a female Hindu from her husband or from her father in law, in the absence of any son or daughter of the deceased shall go to…..

Options:

A.

Heir of mother

B.

Heir of father

C.

Heir of Husband

D.

Heir of Sister

Question 34

Section C (4 Mark)

Mr. Sushobhan Adhikari, 56 years old, employee of Mega India Ltd, receives the following salary and perquisites from his employer during the previous year 2007–08.

A rent-free furnished house in Patna (rent of unfurnished house paid by employer- Rs. 84,000, rent of furniture Rs. 18,000, free services of a gardener (salary-Rs. 4,000), free services of cook (salary-Rs. 3,600), free services of watchman (salary-Rs. 900). He owns a small house at Patna.

Mr. Adhikari makes the following payments and investments during the year:

Mr. Adhikari comes to Mr. Gupta, CWM®, in September-2008 for developing a wealth plan to fulfill his financial goals. Mr. Adhikari will retire on 31st December, 2008 after completing 28 years of service. He is expecting a growth of Rs. 1,500 in his basic pay in the last year of his employment. The company is expecting a 5% growth every year in its turnover. His daughter Pallavi has completed her education and his main liability is the amount he may have to spend for her marriage. On his retirement he is expected to receive following amount:

He also has also informed to the planner following his other assets and investments:

He has given his Kolkata Flat on 12,500 p.m. rent. Municipal value of the property is Rs. 1,45,000, fair rent is Rs. 1,60,000 and standard rent is 1,40,000. Municipal tax paid by him are as follows:

In July, 2008 rent is increased from Rs. 11,500 to Rs. 12,500 pm with effect from 01/04/2007. Due to some dispute rent was not received in 2007–08 but all arrears of rent till date are paid on July 1, 2008. Maximum eligible amount of PPF contribution deposited in March, 2008.

His actual expenses before retirement are Rs. 23,500 per month.

Main goals of Mr. Adhikari:

●To provide for his daughter’s marriage

●Ensuring that his family is protected financially in the event of any mishap

●Minimize tax burden

●Establish an investment portfolio that gives high returns over long term

Assumptions:

●Mr. Adhikari needs to provide for himself and his family till he is 75.

●Inflation rate after retirement to be 4%

●Monthly expenses after retirement will be 15% less than before retirement

After detailed discussion, Mr. Gupta, CWM®, has suggested a revision in the portfolio as below to be implemented from October, 2008.

Options:

Question 35

Section A (1 Mark)

With amortized loans, such as a mortgage:

Options:

A.

Interest is always more than half of the payment amount

B.

Return of principal is always more than half of the payment amount

C.

The proportion of interest to the total decreases later in the payment schedule

D.

The proportion of interest to the total increases later in the payment schedule.

Question 36

Section B (2 Mark)

Consider these two investment strategies:

Strategy ___ is the dominant strategy because __________.

Options:

A.

1, it is riskless

B.

1, it has the highest reward/risk ratio

C.

2, its return is at least equal to Strategy 1 and sometimes greater

D.

2, it has the highest reward/risk ratio

Question 37

Section B (2 Mark)

A taxpayer has taxable income for 2011-12 (after deducting the personal allowance) of £75,200. None of the income is derived from savings or dividends. The income tax liability for the year is:

Options:

A.

£15,040

B.

£23,080

C.

£30,080

D.

£37,600

Question 38

Section A (1 Mark)

All of the following are examples of excise taxes except:

Options:

A.

Cigarette Taxes

B.

Alcohol Taxes

C.

Property Taxes

D.

Gasoline Taxes

Question 39

Section A (1 Mark)

According to Michael Porter, there are five determinants of competition. An example of _____ is when new entrants to an industry our pressure on prices and profits.

Options:

A.

Threat of Entry

B.

Rivalry between Existing Competitors

C.

Pressure from Substitute Products

D.

Bargaining power of Buyers

Question 40

Section B (2 Mark)

X Ltd. has given a dividend of Rs. 3 per share last year. The company is growing at a constant rate of 5 % every year and the investor’s required rate at this share is 12 % per annum. Find out the Intrinsic value of this share.

Options:

A.

Rs.38

B.

Rs.54

C.

Rs.34

D.

Rs.45

Question 41

Section C (4 Mark)

Watts Industries, a manufacturer of valves for industrial and residential use, had the following projected free cash flows to equity per share for the next five years , in nominal terms.

The terminal price is based upon a stable nominal growth rate of 6% a year after year 5. The discount rate, based upon financial market rates, is 14%, and the expected inflation rate is 3%.

Estimate the value per share, using nominal cash flows and the nominal discount rate.

Options:

A.

Rs 16.84

B.

Rs 31.14

C.

Rs 15.95

D.

Rs 17.75

Question 42

Section A (1 Mark)

A zero-investment portfolio with a positive expected return arises when _________.

Options:

A.

An investor has downside risk only

B.

The law of prices is not violated

C.

The opportunity set is not tangent to the capital allocation line

D.

A risk-free arbitrage opportunity exists

Question 43

Section A (1 Mark)

Which of the following options is not true about CODICIL?

Options:

A.

It must be signed by the testator

B.

It must be attested by two witnesses

C.

It is an instrument made in relation to a will

D.

An instrument made by family members of the testator

Question 44

Section B (2 Mark)

A typical personal accident policy would normally have provisions to pay

Options:

A.

2% of the sum assured per week up to a maximum of 52 weeks

B.

1% of the sum assured per week up to a maximum of 104 weeks

C.

1.5% of the sum assured per week up to a maximum of 48 weeks

D.

1% of the sum assured per week up to a maximum of 104 weeks

Question 45

Section A (1 Mark)

A cognitive heuristic in which people tend to reach conclusions based on the 'framework' within which a situation is presented; e.g. people are more lokely to recommend the use of a new procedure if it is described as having a '50% success rate' than a '50% failure rate'. Which of the following is most likely consistent with this bias?

Options:

A.

Anchoring and Adjustment Bias

B.

Framing Bias

C.

Confirmation bias

D.

Overconfidence Bias

Question 46

Section A (1 Mark)

Convertible bond arbitrage is to event driven as _________ is to corporate restructuring.

Options:

A.

Market neutral

B.

Short selling

C.

Distressed securities

D.

Market timers

Question 47

Section B (2 Mark)

Property A provides an annual income of Rs. 160,000 and a similar property B has sold based on 8 % capitalization rates. Calculate the value at which property A can be priced.

Options:

A.

Rs. 20,00,000

B.

Rs. 1,72,800

C.

Rs. 2,35,092

D.

Rs. 29,61,480

Question 48

Section B (2 Mark)

Payment of Gratuity Act 1972 is applicable to

Options:

A.

Every factory establishment

B.

An establishment employing more than 10 employees

C.

Both the above

D.

None of the above

Question 49

Section A (1 Mark)

An activity is presumed to be a profit-making activity rather than a hobby if the

Options:

A.

Activity shows a profit for any three out of five years, ending with the tax year in question.

B.

Activity shows a profit for any two out of five years, ending with the tax year in question.

C.

Taxpayer conducts the activity with some expertise.

D.

Taxpayer conducts the activity in a businesslike manner.

Question 50

Section B (2 Mark)

The equity risk premium for the market is 8 percent. Jackson Products has a beta of 0.4. The real risk-free rate is 2 percent and the expected inflation premium is 5 percent. The required rate of return for Jackson is __________ percent.

Options:

A.

15.4

B.

10.2

C.

7.4

D.

6.7

Question 51

Section A (1 Mark)

Judgement rating is used in case of

Options:

A.

Life Insurance

B.

Health Insurance

C.

Fire Insurance

D.

Ocean Marine Insurance

Question 52

Section B (2 Mark)

Which of the following statements with respect to International Taxation Structure is/are correct?

Options:

A.

I and II

B.

III and IV

C.

I, II and IV

D.

I, II and III

Question 53

Section A (1 Mark)

Which of the following is not a Key Benefit of the In-kind process used by the ETFs?

Options:

A.

Only I

B.

Only II

C.

Only III

D.

None of These

Question 54

Section C (4 Mark)

Navin Corporation, a manufacturer of do-it-yourself hardware and housewares, reported earnings per share of Rs2.10 in 1993, on which it paid dividends per share of Rs0.69. Earnings are expected to grow 15% a year from 1994 to 1998, during which period the dividend payout ratio is expected to remain unchanged. After 1998, the earnings growth rate is expected to drop to a stable 6%, and the payout ratio is expected to increase to 65% of earnings. The firm has a beta of 1.40 currently, and it is expected to have a beta of 1.10 after 1998. The Risk Free rate is 6.25%.

What is the value of the stock, using the two-stage dividend discount model?

Options:

A.

Rs27.59

B.

Rs 30.06

C.

Rs 25.15

D.

Rs 27.75

Question 55

Section A (1 Mark)

Tarun has Rs. 100000/- in a account and starts investing Rs. 7500/-per month at the beginning of the month. If the account pays 10% p.a interest compounded half yearly. What will be the accumulated amount in his account after 20 years.

Options:

A.

6597345.23

B.

5593465.19

C.

5923472.45

D.

6623456.23

Question 56

Section A (1 Mark)

Determine the status of X and Y who are the legal heirs of Z

Options:

A.

Local Athority

B.

BOI

C.

An individual

D.

HUF

Question 57

Section B (2 Mark)

Which of the following two outcomes is an example of Status Quo Bias:

Options:

A.

I

B.

II

C.

Both of the above

D.

None of the above

Question 58

Section A (1 Mark)

The _______ is typically taken to be the risk-free rate.

Options:

A.

Savings account

B.

Certificate of deposit

C.

Treasury bill

D.

Treasury bond

Question 59

Section B (2 Mark)

Calculate the value at which an office building can be priced from the following information:

A similar building has 8% capitalization rates.

Options:

A.

Rs. 23,95,500

B.

Rs. 23,00,000

C.

Rs. 24,13,500

D.

Rs. 22,12,000

Question 60

Section C (4 Mark)

Consider the multifactor APT. There are two independent economic factors, F1 and F2. The risk-free rate of return is 6%. The following information is available about two well-diversified portfolios:

Assuming no arbitrage opportunities exist, the risk premium on the factor F1 portfolio should be __________.

Options:

A.

3%

B.

4%

C.

5%

D.

6%

Question 61

Section A (1 Mark)

Riskier stocks have

Options:

A.

Higher P/E multiple

B.

Lower P/E multiple

C.

Higher variance

D.

(B) and (C)

Question 62

Section A (1 Mark)

Mansi deposits Rs. 50,000/- in a bank account which pays interest @ 10 % per annum. How much can be withdrawn at the beginning of each year for 5 years if first withdrawal is 6 years from now?

Options:

A.

20242.42

B.

22242.42

C.

31242.42

D.

21242.42

Question 63

Section B (2 Mark)

An Indian citizen leaving India during the previous year for employment purpose is said to be resident If:

Options:

A.

He is in India for a period of 60 days or more during the previous year and for 365 or more days during 4 previous years immediately preceding the relevant previous year

B.

He is in India in the previous year for a period of 182 days or more

C.

He is not considered as a resident

D.

He has a house in India

Question 64

Section A (1 Mark)

The difference between a wagering contract and insurance contract is ___________.

Options:

A.

The insured has an insurable interest in the subject matter of insurance.

B.

Money involved

C.

Parties involved

D.

None of the above

Question 65

Section A (1 Mark)

A draft of a will prepared by the head of the family which will decide the nature in which his properties will be distrubuted among his heirs is known as_____________________.

Options:

A.

Lease / Tenancy Agreement

B.

Will

C.

Power of attorney

D.

Family Settlement

Question 66

Section A (1 Mark)

After buying two stocks, one rises by 25% an d the other drops by 25%. You congratulate yourself on your brilliance for the first stock and blame bad luck on the second. You are demonstrating which investor bias?

Options:

A.

Gambler's fallacy

B.

Law of small numbers

C.

Recency bias

D.

Self-attribution bias

Question 67

Section B (2 Mark)

As per Double Taxation Avoidance Agreement, the Royalties in Mauritius is charged at:

Options:

A.

10

B.

15

C.

20

D.

Nil

Question 68

Section B (2 Mark)

You buy a share of ABC Ltd for Rs. 20. You expect it to pay dividends of Re.1, Rs.1.10 and Rs.1.21 in coming three years. Calculate the growth rate in dividend:

Options:

A.

5%

B.

6%

C.

8%

D.

10%

Question 69

Section B (2 Mark)

Both __________ depend on electronic information that has been collected about customers, in place of human knowledge, to build and manage relationships.

Options:

A.

CRM and e-CRM

B.

Customer and consumer

C.

Product and service

D.

Service and idea

Question 70

Section A (1 Mark)

Which type of portfolio allocation is usually done once every few years?

Options:

A.

Integrated asset allocation

B.

Strategic asset allocation

C.

Tactical asset allocation

D.

Command asset allocation

Question 71

Section B (2 Mark)

Mr. Patel expects the stock of A to sell for Rs. 70/- a year from now and to pay Rs. 4/- dividend. If the stock’s correlation with the Market is –0.3, and the standard deviation of A is 40% and standard deviation of the Market is 20% and the risk free rate of return is 5% and the market risk premium is 5%, what would be the price of stock A be now ?

Options:

A.

74

B.

73.65

C.

72.55

D.

75.65

Question 72

Section A (1 Mark)

Equifax Credit Report Contain

Options:

A.

I, III and V

B.

II, IV and V

C.

I, III and IV

D.

All of the Above

Question 73

Section B (2 Mark)

A constant proportion portfolio insurance (CPPI) policy calls for:

Options:

A.

Selling stocks as they fall and buying stocks as they rise

B.

Buying stocks as they fall and selling stocks as they rise

C.

Buying a constant number of shares of a stock every month

D.

Selling a constant number of shares of a stock every month

Question 74

Section C (4 Mark)

Suppose Nifty is at 4450 on 27th April. An investor, Mr. A enters a long straddle by buying a May Rs 4500 Nifty Put for Rs. 85 and a May Rs. 4500 Nifty Call for Rs. 122.

What would be the Net Payoff of the Strategy?

• If Nifty closes at 3729

• If Nifty closes at 5214

Options:

A.

457 and -547

B.

343 and 580

C.

-107 and 547

D.

564 and 507

Question 75

Section B (2 Mark)

The ____________ provides an unequivocal statement on the expected return-beta relationship for all assets, whereas the _____________ implies that this relationship holds for all but perhaps a small number of securities.

Options:

A.

APT, CAPM

B.

APT, OPM

C.

CAPM, APT

D.

CAPM, OPM

Question 76

Section B (2 Mark)

As a result of a lawsuit, Catherine was awarded $300,000 for compensatory damages and $400,000 for punitive damages. What is the taxable income resulting from this suit?

Options:

A.

$0

B.

$300,000

C.

$400,000

D.

$700,000

Question 77

Section A (1 Mark)

Debt Equity Ratio is 3:1,the amount of total assets Rs.20 lac, current ratio is 1.5:1 and owned funds Rs.3 lac. What is the amount of current asset?

Options:

A.

Rs.5 lac

B.

Rs.3 lac

C.

Rs.12 lac

D.

None of the above.

Question 78

Section A (1 Mark)

Generally speaking, high severity of losses will be accompanied by

Options:

A.

High frequency of losses

B.

Low frequency of losses

C.

Equal frequency of losses

D.

None of these

Question 79

Section B (2 Mark)

In the calculation of rates of return on common stock, dividends are _______ and capital gains are _____.

Options:

A.

Guaranteed; not guaranteed

B.

Guaranteed; guaranteed

C.

Not guaranteed; not guaranteed

D.

Not guaranteed; guaranteed

Question 80

Section A (1 Mark)

While matching orders for equity trading in NSE, which one of the following gets precedence over all the others?

Options:

A.

Time of the order

B.

Price of the order

C.

Size of the order

D.

Both b and c

Question 81

Section A (1 Mark)

A(n)_______________ is a credit-rating agency that keeps records of borrowers' loan payment histories.

Options:

A.

Credit Agreement

B.

Credit Monitoring authority

C.

Credit Bureau

D.

Central Bank

Question 82

Section B (2 Mark)

Reliable ltd. has current earnings per share of Rs. 5. Assume a dividend – payout ratio of 50 percent. Earnings grow at a rate of 9 percent per year. If the required rate of return is 14 percent, what is its current value?

Options:

A.

Rs.45.25

B.

Rs.52.68

C.

Rs.56.75

D.

Rs.54.50

Question 83

Section A (1 Mark)

The covariance of the market returns with the stocks returns is 0.008. The standard deviation of the market is 8% and standard deviation of stock’s return is 11%. What is the correlation coefficient between stocks and market returns?

Options:

A.

0.5

B.

0.91

C.

1

D.

1.25

Question 84

Section A (1 Mark)

A 15 year annuity due has a future value of Rs. 15,00,000/- If ROI is 9 % per annum, then how much will be each annuity amount ?

Options:

A.

35487.98

B.

56487.32

C.

46870.02

D.

47897.12

Question 85

Section A (1 Mark)

Which of the following is/are the challenges of Private Banking?

Options:

A.

I, II and III

B.

I,III and IV

C.

I, II and IV

D.

All of Them

Question 86

Section A (1 Mark)

_______________ consists of the constatation that people buy both insurances and lottery tickets .

Options:

A.

Alias Paradox

B.

St Petersburg Paradox

C.

Cramer's Solution

D.

he Friedman-Savage Puzzle

Question 87

Section B (2 Mark)

What is the PV of an Annuity Due which provides Rs. 2,000/- per month for first 3 years and then Rs. 3,000/- per month for next 2 years. This annuity starts 4 years from now and ROI is 9 % per annum compounded monthly?

Options:

A.

81234.87

B.

66159.94

C.

80704.76

D.

79453.34

Question 88

Section C (4 Mark)

Monika has a investment portfolio of Rs. 100000, a floor of Rs. 75000, and a multiplier of 2. So the initial portfolio mix is 50000 in stocks and 50000 in bonds. If stock market falls by 20%, what should Monika do?

Options:

A.

She should sell Rs.10000 of stocks and invest it into bonds

B.

She should sell Rs.10000 of bonds and invest it into stocks

C.

She should sell stocks and bonds equally

D.

She should buy Rs.20000 of stocks to average

Question 89

Section A (1 Mark)

In order to remain competitive, non-core providers need to achieve the following:

Options:

A.

I,II,III

B.

II,III,IV

C.

I,III,IV

D.

All of the above

Question 90

Section B (2 Mark)

Consider the single-factor APT. Stocks A and B have expected returns of 15% and 18%, respectively. The risk-free rate of return is 6%. Stock B has a beta of 1.0. If arbitrage opportunities are ruled out, stock A has a beta of __________.

Options:

A.

0.67

B.

1

C.

1.3

D.

none of the above

Question 91

Section B (2 Mark)

Manav wishes to calculate that if he wants to withdraw Rs. 2,000/- every Quarter at start of the month for 6 years, then how much amount is required to be in his account today. He wants to start this withdrawal immediately and ROI is 9 % per annum compounded quarterly.

Options:

A.

36987.34

B.

37605.57

C.

34598.98

D.

44378.98

Question 92

Section C (4 Mark)

Mr. XYZ is bullish on Nifty when it is at 4191.10. He sells a Put option with a strike price of Rs. 4100 at a premium of Rs. 170.50 expiring on 31st July. If the Nifty index stays above 4100, he will gain the amount of premium as the Put buyer won’t exercise his option. In case the Nifty falls below 4100, Put buyer will exercise the option and the Mr. XYZ will start losing money. If the Nifty falls below 3929.50, which is the breakeven point, Mr. XYZ will lose the premium and more depending on the extent of the fall in Nifty.

What would be the Net Payoff of the Strategy?

• If Nifty closes at 3400

• If Nifty closes at 4800

Options:

A.

185.25 and 250.35

B.

-243.80 and 208.20

C.

-229.50 and 145.50

D.

-529.50 and 170.50

Question 93

Section A (1 Mark)

One aspect of the tax considerations in asset allocation is that

Options:

A.

Capital gains are often taxed at a higher rate than income.

B.

Taxes on capital gains are deferred until the gain is realized.

C.

Investors are exempt from taxes on capital gains once they reach age 65.

D.

Current income is seldom a significant consideration for an investor in the spending phase of the life cycle.

Question 94

Section A (1 Mark)

The trust which is empty at creation during life and tranfers the property into the trust at death is called ____________

Options:

A.

Special trust

B.

Will trust

C.

Secret trust

D.

Pourover trust

Question 95

Section C (4 Mark)

Arvind Ltd. currently EPS is Rs.5. Its return on equity (ROE) is 25% and it retains 60% of its earning. Stocks of similar risk are priced to return 18%. What is the intrinsic value of Arvind Ltd’s Stock?

Options:

A.

Rs. 76.67

B.

Rs. 72.36

C.

Rs. 74.45

D.

Rs. 73.25

Question 96

Section C (4 Mark)

You are considering adding a new product to your firm's existing product line. It should cause a 15 percent increase in your profit margin (i.e., new PM = old PM x 1.15), but it will also require a 50 percent increase in total assets (i.e., new TA = old TA x 1.5). You expect to finance this asset growth entirely by debt. If the following ratios were computed before the change, what will be the new ROE if the new product is added and sales remain constant?

Options:

A.

20%

B.

53%

C.

40%

D.

46%

Question 97

Section A (1 Mark)

Financial Independence usually occurs between _______

Options:

A.

40-55

B.

55-70

C.

70-85

D.

None of the above

Question 98

Section B (2 Mark)

Hybrid plans are

Options:

A.

Combination of DB & ESOP plan

B.

Combination of DB & DC plan

C.

Combination of ESOP and Money purchase plan

D.

None of the above

Question 99

Section A (1 Mark)

After the satisfaction of insured’s claim from the insurer, the insured should pursue in the recovering of rights from the 3rd party.

Options:

A.

Yes, If he is willing to do so

B.

No, there is no obligation on his part

C.

Yes, he has a duty to the same

D.

Yes, if there is a mutual consent between insurer & the insured

Question 100

Section B (2 Mark)

The estimated Net Operating Income of an office building is Rs. 12000 per year. An appraiser decide the appropriate capitalization rate is 12% comprised of 10% return on investment and 2% for depreciation, what is the estimated value of the building?

Options:

A.

Rs. 1,00,000

B.

Rs 1,20,000

C.

Rs 1,44,000

D.

Rs 1,50,000

Question 101

Section B (2 Mark)

Suppose you are working with two factor portfolios, Portfolio 1 and Portfolio 2. The portfolios have expected returns of 15% and 6%, respectively. Based on this information, what would be the expected return on well-diversified portfolio A, if A has a beta of 0.80 on the first factor and 0.50 on the second factor? The risk-free rate is 3%.

Options:

A.

15.20%

B.

14.10%

C.

13.30%

D.

10.70%

Question 102

Section A (1 Mark)

Which part of the wealth management planning deals with efficient and optimum use of credit for the business.?

Options:

A.

Estate Planning

B.

Cash Flow Planning

C.

Investment Planning

D.

Asset Protection

Question 103

Section A (1 Mark)

How many sections are there in Householder’s Insurance Policy?

Options:

A.

15

B.

10

C.

12

D.

14

Question 104

Section B (2 Mark)

Reliance Ltd. has issued a preferred stock that pays Rs.10 per share. The dividend is fixed and the stock has no expiration date. What is the intrinsic value of Reliance Ltd. stock, assuming a discount rate of 14%?

Options:

A.

Rs. 61.75

B.

Rs. 75.75

C.

Rs. 71.42

D.

Rs. 62.26

Question 105

Section A (1 Mark)

The inventory turnover ratio and days sales outstanding (DSO) are two ratios that can be used to assess how effectively the firm is managing its assets in consideration of current and projected operating levels.

Options:

A.

TRUE

B.

FALSE

Question 106

Section B (2 Mark)

Withholding Tax Rates for payments made to Non-Residents are determined by the Finance Act passed by the Parliament for various years. The current rates for Dividends are:

Options:

A.

10

B.

15

C.

20

D.

12

Question 107

Section C (4 Mark)

KB, a household product manufacturer, reported earnings per share of Rs3.20 in 1993, and paid dividends per share of Rs1.70 in that year. The firm reported depreciation of Rs315 million in 1993, and capital expenditures of Rs475 million. (There were 160 million shares outstanding, trading at Rs51 per share.) This ratio of capital expenditures to depreciation is expected to be maintained in the long term. The working capital needs are negligible. KB had debt outstanding of Rs1.6 billion, and intends to maintain its current financing mix (of debt and equity) to finance future investment needs. The firm is in steady state and earnings are expected to grow 7% a year. The stock had a beta of 1.05. (The Risk Free Rate is 6.25%.)

Estimate the value per share, using the FCFE Model.

Options:

A.

Rs 41.45

B.

Rs 55.36

C.

Rs 50.20

D.

Rs 61.75

Question 108

Section C (4 Mark)

Which of the following statements is/are correct?

Options:

A.

I and II

B.

I, II and IV

C.

III and IV

D.

All of the Above

Question 109

Section B (2 Mark)

PPF is a

Options:

A.

Mandatory program for every employee

B.

Mandatory for every Income Tax assessed

C.

Self directed retirement program

D.

None of the above

Question 110

Section C (4 Mark)

To create a common size income statement ____________ all items on the income statement by ____________.

Options:

A.

multiply; net income

B.

multiply; total revenue

C.

divide; net income

D.

divide; total revenue

Question 111

Section A (1 Mark)

In a bull spread, the investor makes profits if market goes

Options:

A.

Up

B.

Down

C.

Sideways

D.

None of the above

Question 112

Section A (1 Mark)

The disposition effect relates to the fact that:

Options:

A.

Investors tend to overconfident regarding potential stock prices.

B.

Investors often experience regrets about trading decisions.

C.

Investors are more likely to sell winners than losers.

D.

Investors tend to dispose of stocks at the end of the year.

Question 113

Section A (1 Mark)

A firm in an industry that is very sensitive to the business cycle will likely have a stock beta ___________.

Options:

A.

Greater than 1.0

B.

Equal to 1.0

C.

Less than 1.0 but greater than 0.0

D.

Equal to or less than 0.0

Question 114

Section C (4 Mark)

As a CWM you are required to calculate the tax liability of an individual whose taxable income is:

• $ 83560 in SGD and he is a Singapore citizen

• £ 73150p.a (only employment) and he is a UK citizen

Options:

A.

£ 6715.80 and 2843.50 SGD

B.

£ 13431.60 and 6906.25 SGD

C.

£ 29260 and 11698.40 SGD

D.

£ 16789.50 and 2310 SGD

Question 115

Section B (2 Mark)

The expected returns and standard deviations of stock A and B are:

Manish buys Rs.20000 stock A and sells short Rs.10000 of stock B, using all the proceeds to buy more of stock A. The correlation between the two securities is 0.25. What are the expected return and the standard deviation of Manish’s portfolio?

Options:

A.

17%, 15.4%

B.

15.4%, 14%

C.

13%, 12%

D.

11%, 10%

Question 116

Section C (4 Mark)

Pizer Drugs, a large drugstore chain, had sales per share of Rs122 in 1993, on which it reported earnings per share of Rs2.45 and paid a dividend per share of Rs1.12. The company is expected to grow 6% in the long term, and has a beta of 0.90. The current Risk Free Rate is 7%.

Estimate the appropriate Price for Pizer Drug and what would the profit margin need to be to justify the price per share if the stock is currently trading for Rs34 per share, assuming the growth rate is estimated correctly,

Options:

A.

Rs20.18 and 4.12%

B.

Rs 21.05 and 5.25%

C.

Rs 19.87 and 3.42%

D.

Rs 18.54 and 3.75%

Question 117

Section A (1 Mark)

_____________seek to explain people's preferences in relation to consumption and saving over the course of their life.

Options:

A.

In Equity Reversion

B.

Money Illusion

C.

Reciprocity

D.

Inter Temporal Consumption

Question 118

Section B (2 Mark)

As Per Article 12 Double Taxation Avoidance Agreement with US, _____per cent of the gross amount of the royalties or fees for included services as defined in this Article, where the payer of the royalties or fees is the Government of that Contracting State, a political sub-division or a public sector company.

Options:

A.

10

B.

15

C.

20

D.

12

Question 119

Section B (2 Mark)

Which one of the above statements is/are incorrect?

Options:

A.

(i) only

B.

(ii) only

C.

Both

D.

None of the above

Question 120

Section C (4 Mark)

Read the senario and answer to the question.

Calculate the income chargeable to tax from rented flat of Kolkata, for the assessment years 2008–09 and 2009–10.

Options:

A.

Rs. 78,400, Rs. 82,600

B.

Rs. 78,400, Rs. 89,600

C.

Rs. 82,600, Rs. 78,400

D.

Rs, 68,600, Rs. 86,300

Question 121

Section A (1 Mark)

An American call option can be exercised

Options:

A.

Any time on or before the expiration date.

B.

Only on the expiration date.

C.

Any time in the indefinite future.

D.

Only after dividends are paid.

Question 122

Section B (2 Mark)

Dharampal has let out his house property at monthly rate of Rs. 12000. He has paid Rs.3500 as annual municipal tax. He wants to know the Net Annual value of his house at Bhuj for AY 2011-12. The Municipal value of the house is Rs. 90,000, Fair rent Rs. 1,40,000, Standard rent Rs. 1,20,000. The house was vacant for one month during the previous year 2010-11 and the rent has not changed since then.

Options:

A.

Rs. 1,40,500

B.

Rs. 1,36,500

C.

Rs. 1,28,500

D.

Rs. 1,32,000

Question 123

Section A (1 Mark)

Which of the following is a market anomaly?

Options:

A.

A relationship between money supply growth and stock prices.

B.

A relationship between P/E ratios and subsequent stock returns.

C.

Independence of stock price changes.

D.

Adjustment of stock prices due to accounting changes.

Question 124

Section B (2 Mark)

Lokesh purchased a flat on 1-4-1996 for Rs. 10,00,000/-. He sells the same flat on 1-10-2006 for Rs. 25,00,000/-.As a CWM® calculate the Indexed Cost of Acquisition on which capital gain would be calculated. (The CII of year 1995-96 is 281, for year 1996-97 is 305, for year 2005-06 is 497 and for year 2006-07 is 519).

Options:

A.

17,01,639

B.

18,46,975

C.

17,68,683

D.

16,29,508

Question 125

Section B (2 Mark)

Fifteen Year ago, Sandeep set up his initial allocation in her defined contribution plan by placing an equal amount in each asset class and never changed it. Over time, he increased his contribution by 3 % per year until he reached maximum amount allowed by law. Which of the following biases that Sandeep suffers from?

Options:

A.

Representativeness Bias

B.

Status Quo Bias

C.

Availability Bias

D.

Confirmation Bias

Question 126

Section A (1 Mark)

A document that is executed by the sellor of the flat so that the Cooperative Society to which the flat belongs and the purchaser is completely indemnified against any claims that any other person may make on the rights of ownership of the flat or other any that is yet unpaid by the seller ( eg. taxes) is known as_________

Options:

A.

Lease / Tenancy Agreement

B.

Development Agreement

C.

Agreement for Sale

D.

Indemnity Bond

Question 127

Section A (1 Mark)

Vineet invests Rs. 5000/- per month at the beginning of the month for 10 years in Recurring Deposit account that pays 8.5% p.a interest compounded quarterly. What will be the accumulated amount in his account.

Options:

A.

944149.33

B.

939154.12

C.

899143.23

D.

99123.43

Question 128

Section B (2 Mark)

Which of the following is/are the Potential Challenges for wealth management players in India:

Options:

A.

I, III, IV and V

B.

II, III, IV and V

C.

I, II and III

D.

All of the above

Question 129

Section B (2 Mark)

The current market price of a share of MOD stock is Rs15. If a put option on this stock has a strike price of Rs20, the put

Options:

A.

is out of the money.

B.

Is in the money.

C.

Can be exercised profitably.

D.

A and C.

Question 130

Section A (1 Mark)

The CDO structures which are used by asset management companies, insurance companies and other investment shops with the intent of exploiting a mismatch between the yield of underlying securities and lower cost of servicing the CDO structures are called___________.

Options:

A.

Market Value Arbitrage CDOs

B.

Synthetic Arbitrage CDOs

C.

Cash Flow Arbritrage CDOs

D.

Synthetic Balance Sheet CDOs

Question 131

Section B (2 Mark)

Which of the following statements is/are correct with respect to Mental Accounting?

Options:

A.

I and II

B.

II and III

C.

I and III

D.

All of the Above

Question 132

Section B (2 Mark)

Consider the one-factor APT. The variance of returns on the factor portfolio is 6%. The beta of a well-diversified portfolio on the factor is 1.1. The variance of returns on the well-diversified portfolio is approximately __________.

Options:

A.

3.60%

B.

6.00%

C.

7.30%

D.

10.10%

Question 133

Section C (4 Mark)

Samantha celebrated her 21st birthday today, her father gave her Rs. 6,25,000/- which is deposited in a account that pays a ROI of 12.25% p.a. compounded monthly. If she wants to withdraw Rs. 7,50,000 on her 31st. Birthday and balance on her 41stBirthday. How much can she withdraw on her 41st. birthday ?

Options:

A.

2114431

B.

1364431

C.

4615995

D.

4333264

Question 134

Section C (4 Mark)

Read the senario and answer to the question.

For the purpose of World Tour Nimita has an option to use her investments in PPF A/c. She would contribute maximum permissible amount on the 1st working day of April every year till its due maturity as well as in all years of the extension of account for a 5-year term after its due maturity. She wants to use half of the PPF account proceeds for the proposed world tour. You estimate the adequacy of such amount, the same is _____________.

Options:

A.

Short by Rs. 44,200

B.

In excess by Rs. 1,05,400

C.

Short by Rs. 44,200

D.

In excess by Rs. 52260

Question 135

Section A (1 Mark)

The concept of indemnity is based on the key principle that policyholders should be prevented from

Options:

A.

Insuring existing losses

B.

Making false insurance claims

C.

Paying excessively for insurance cover

D.

Profiting from insurance

Question 136

Section A (1 Mark)

What would be the tax liability if tea and snacks are provided in the office after office hours?

Options:

A.

Nil

B.

Nil, if it is uptoRs. 50 per meal

C.

Actual amount spent by the employer

D.

Nil, if it is upto Rs. 75 per meal

Question 137

Section C (4 Mark)

Which of the following statements is/are correct?

Options:

A.

I and II

B.

I, II and III

C.

III and IV

D.

All of the Above

Question 138

Section A (1 Mark)

Pure premium and Loss Ratio methods are two methods to determine

Options:

A.

Judgement Rated premium

B.

Class rated premium

C.

Merit rated premium

D.

None of the above

Question 139

Section C (4 Mark)

Read the senario and answer to the question.

Mr. Mehta buys machinery for Rs. 80000 which is to be replaced after a period of two years. The replacement cost at that time will be Rs. 90000. As a Chartered Wealth Manager advice Mr. Mehta now what he should do after two year for the replacement of the said machinery?

Options:

A.

He should buy the new machinery first and sells the old machine in the next financial year

B.

He should sell new machinery first and buy the old machine in the next financial year

C.

He should buy and sell the machine in the same financial year

D.

He should buy and sell the machine in the financial year 2011

Question 140

Section B (2 Mark)

The arbitrage pricing theory (APT) and the CAPM both assume all except which of the following?

Options:

A.

Investors have homogeneous beliefs.

B.

Investors are risk-averse utility maximizers.

C.

Borrowing and lending can be done at the rate RF.

D.

Markets are perfect.

Question 141

Section A (1 Mark)

Passive Preserver follows a ___________ Investment Style

Options:

A.

Conservative

B.

Aggressive

C.

Moderate

D.

Risk Averse

Question 142

Section C (4 Mark)

Dab Ltd manufactures, markets, and services automated teller machines. The following are selected numbers from the financial statements for 1992 and 1993 (in millions):

The firm had capital expenditures of Rs15 million in 1992 and Rs18 million in 1993. The working capital in 1991 was Rs180 million.

Estimate the cash flows to equity in 1992 and 1993. (in Rs Millions)

Options:

A.

45 and (20.5)

B.

43.60 and (21)

C.

76 and 19.55

D.

102 and 301

Question 143

Section B (2 Mark)

The current market price of a share of XYZ stock is Rs50. If a call option on this stock has a strike price of Rs45, the call

Options:

A.

Is out of the money.

B.

Is in the money.

C.

Sells for a higher price than if the market price of XYZ stock is Rs. 40.

D.

B and C.

Question 144

Section B (2 Mark)

How much total interest is paid between the 5th and 11th payments inclusive on a loan that has monthly payments for 2 years and an original principal of Rs47 500? The loan rate is 6.6% compounded quarterly.

Options:

A.

Rs. 1311.87

B.

Rs. 1156.18

C.

Rs. 13 509.39

D.

Rs. 1093.02

Question 145

Section B (2 Mark)

Which of the following statements is / are correct?

Options:

A.

Only I and II

B.

II, III and IV

C.

I, II and III

D.

All of the above

Question 146

Section A (1 Mark)

Limited growth prospects are indicated by

Options:

A.

High dividend

B.

High P/E ratio

C.

Low dividend

D.

High dividend and low P/E ratio

Question 147

Section B (2 Mark)

Which of the following Statements are correct?

Options:

A.

II, III and IV

B.

I, II and III

C.

I and IV

D.

All of the above

Question 148

Section A (1 Mark)

Deduction under section 80-IC is allowed to the extent of:

Options:

A.

100% of profits and gains for ten assessment years

B.

100% of profits and gains for ten assessment years in case of any undertaking or enterprise in the States of Sikkim or North Eastern Region and 50% in case of undertaking in Uttaranchal and Himachal Pradesh

C.

100% of profits and gains for ten assessment years in case of an undertaking or enterprise in the States of Sikkim or North Eastern States and 100% of profits and gains for the first 5 assessment years and 25% (30% in case of companies) for next 5 assessment years.

D.

None of These

Question 149

Section B (2 Mark)

Portfolio A has expected return of 10% and standard deviation of 19%. Portfolio B has expected return of 12% and standard deviation of 17%. Rational investors will

Options:

A.

Borrow at the risk free rate and buy A.

B.

Sell A short and buy B.

C.

Sell B short and buy A.

D.

Borrow at the risk free rate and buy B.

Question 150

Section A (1 Mark)

In order to have confirmation of a major market trend under the Dow Theory, the

Options:

A.

Industrial and utility averages must confirm each other

B.

Transportation and utility averages must confirm each other.

C.

Utility average must lead the transportation average

D.

Transportation and industrial average must confirm each other.

Question 151

Section A (1 Mark)

REIT Preferred Stock can offer lower total returns than common stock and have some liquidity issues as well.

Options:

A.

TRUE

B.

FALSE

Question 152

Section C (4 Mark)

As a CWM you are required to calculate the tax liability of an individual whose Taxable income is:

• $ 142700 in US dollars and he is a US citizen (married Individual Filing Joint returns and Surviving Spouses)

• $ 67250 in SGD and he is a citizen of Singapore

Options:

A.

27735 USD and 5716.25 SGD

B.

28460.50 USD and 15680 SGD

C.

24580.50 USD and 16100 SGD

D.

26480 USD and 15870 SGD

Question 153

Section A (1 Mark)

In US How many states do not have a personal income tax?

Options:

A.

9

B.

10

C.

11

D.

All of the above

Question 154

Section B (2 Mark)

Which of the following are the two skills associated with being a good listener?

Options:

A.

To pay attention and to provide a strong point of view in response to a given message.

B.

To pay attention and to provide feedback.

C.

To pay attention and to mask your disinterest when necessary.

D.

To listen to more than one message at a time and to provide constructive criticism

Question 155

Section B (2 Mark)

Customer relationship management applications dealing with the analysis of customer data to provide information for improving business performance best describes by which of the following?

Options:

A.

Generic customer relationship management applications

B.

Supply chain management applications.

C.

Analytical customer relationship management applications

D.

Operational customer relationship management applications

Question 156

Section A (1 Mark)

What amount needs to be invested today at 10 % per annum, so that it pays Rs. 1 lac per annum for 5 years, starting from 6th year to 10thyear. First payment starts at BEGIN of 6thyear.?

Options:

A.

258915.49

B.

416986.23

C.

262923.34

D.

423789.34

Question 157

Section B (2 Mark)

Which of the following statements is/are correct with respect for Resident Senior Citizen i.e. who is of an age of 60 years and above, but below 80 years?

Options:

A.

I and II

B.

I and IV

C.

Only III

D.

All of the above

Question 158

Section C (4 Mark)

Read the senario and answer to the question.

Calculate the retirement corpus required by Raman to generate his post-retirement expenses.

Options:

A.

Rs. 64,97,596

B.

Rs.71,24,232

C.

Rs. 74,36,638

D.

Rs. 63,27,856

Question 159

Section B (2 Mark)

For calculation of liability of payment of gratuity to an employee on leaving service, the wage to be taken into account is

Options:

A.

Average wage earned during the entire service

B.

Average wage earned during the last 5 years

C.

Last drawn wage

D.

None of the above

Question 160

Section A (1 Mark)

Which of the following is an effective strategy in times of falling interest rates?

Options:

A.

Use long-term loans to take advantage of current low rates.

B.

Use short-term loans to take advantage of lower rates when you refinance the loans.

C.

Select short-term savings instruments to take advantage of higher rates when they mature.

D.

Select short-term savings instruments to lock-in earnings at current high rates.

Question 161

Section B (2 Mark)

The Wilson Corporation has the following relationships:

What is Wilson’s profit margin and debt ratio?

Options:

A.

2%; 0.33

B.

4%; 0.33

C.

4%; 0.67

D.

2%; 0.67

Question 162

Section A (1 Mark)

Another name for open-end credit is:

Options:

A.

Revolving credit.

B.

A box of credit.

C.

Convenience credit.

D.

Installment credit.

Question 163

Section A (1 Mark)

Anurag has invested Rs. 10 lakh. in a pension fund that pays an interest rate of 12% p.a. compounded quarterly. If Anurag wants to withdraw money after 25 years every month for next 20 years what amount can he withdraw.

Options:

A.

220034

B.

230972

C.

210034

D.

200021

Question 164

Section A (1 Mark)

Which of the following is/are the challenges of Private Banking?

Options:

A.

I, II and III

B.

I,III and IV

C.

I, II and IV

D.

All of Them

Question 165

Section C (4 Mark)

Read the senario and answer to the question.

Portfolio A had a return of 12% in the previous year, while the market had an average return of 10%. The standard deviation of the portfolio was calculated to be 20%, while the standard deviation of the market was 15% over the same time period. If the correlation between the portfolio and the market is 0.8, what is the Beta of the portfolio A?

Options:

A.

0.94

B.

1.07

C.

1.31

D.

1.91

Question 166

Section B (2 Mark)

In 2011-12, Steven has business profits of £34,125, net bank interest of £1,240 and net dividends of £9,000. He claims the personal allowance of £7,475. What is the income tax payable for the year after subtracting tax deducted at source?

Options:

A.

£7,360

B.

£6,050

C.

£8,280

D.

£6,290

Question 167

Section B (2 Mark)

Which one of the above statements is/are correct?

Options:

A.

(i) only

B.

(ii) only

C.

Both are correct

D.

Both are incorrect

Question 168

Section A (1 Mark)

During “Early accumulation” life stage, typical asset allocation should be

Options:

A.

25% equities, rest in fixed income instruments

B.

50% equities, rest in fixed income instruments

C.

75% equities, rest in fixed income instruments

D.

100% equities

Question 169

Section A (1 Mark)

Why have consumers/customers been so hyper-aware and so nervous?

Options:

A.

Much more information is collected and seemingly available to more people at much faster rate.

B.

Much more information is collected and seemingly not available to more people at much faster rate.

C.

Much more information is not collected and seemingly available to more people at much faster rate.

D.

Much more information is not collected and seemingly not available to more people at much faster rate.

Question 170

Section C (4 Mark)

Read the senario and answer to the question.

Saxena bought agricultural land in notified urban limits of Mumbai on 15-June-1996 for Rs. 6 lakh and had been using the same for agricultural purposes. However the land was compulsorily acquired by the Government on 15-July-2003 and the compensation fixed was Rs. 25 lakh. Out of this, Rs 10 lakh was received by Saxena on 15-Jan-2005 and the balance on 06-Apr-2005. Saxena was not satisfied with the compensation and filed a suit in the court. The compensation was enhanced by Rs 8 lakh which was received on 25-Mar-2008. Which one of the following statement regarding capital gains arising from these transactions is correct:

Options:

A.

The entire enhanced compensation of Rs. 8 Lakh shall be taxable.

B.

The entire enhanced compensation of Rs. 8 Lakh shall be exempt.

C.

The entire original compensation of Rs. 25 Lakh shall be exempt.

D.

Rs. 10 lakh from original compensation is exempt, while Rs. 15 lakh is taxable.

Question 171

Section B (2 Mark)

Expenses are 10% of the gross (office) premium. Pure premium is Rs. 200. Calculate office premium.

Options:

A.

222

B.

220

C.

182

D.

180

Question 172

Section A (1 Mark)

A cognitive heuristic in which decisions are made based on how representative a given individual case appears to be independent of other information about its actual likelihood. We tend to think that trends we observe are likely to continue. Which of the following is most likely consistent with this bias?

Options:

A.

Anchoring and Adjustment Bias

B.

mental accounting

C.

Representativeness Bias

D.

hindsight bias

Question 173

Section A (1 Mark)

Which of the following is an advantage of a credit scoring model?

Options:

A.

Credit scoring models rely on the evaluation of an experienced credit officer

B.

Credit scoring models are immune from charges of discrimination

C.

Credit scoring models never make mistakes

D.

Credit scoring models can handle a large volume of applications in a short period of time

Question 174

Section C (4 Mark)

An investor Mr. Dayal, executes a Long Strangle by buying a Rs. 4300 Nifty Put for a premium of Rs. 23 and a Rs 4700Nifty Call for Rs 43. The Nifty is at 4500

The Net Payoff of Long Strangle

• If Nifty closes at 4100

• If Nifty closes at 5300

Options:

A.

-66 and 34

B.

234 and 334

C.

134 and 534

D.

234 and 0

Question 175

Section B (2 Mark)

What is the size of the final unequal payment of a loan for Rs15 600 and it has monthly payments of Rs500? The interest rate is 9.92% compounded quarterly.

Options:

A.

Rs. 383.11

B.

Rs. 380.21

C.

Rs. 388.97

D.

Rs. 417.27

Question 176

Section C (4 Mark)

To fulfil the Educational Qualification to be registered as an Investment Advisor under the SEBI Investment Advisor Regulations 2013, The applicant must:

Options:

A.

Both I and IV

B.

Both II and III

C.

Either of I or II and Either of III or IV

D.

All I, II, III and IV

Question 177

Section B (2 Mark)

Which of the following activities is/are a part of “Building the CRM project foundation phase “in CRM implementation?

Options:

A.

I, II and III

B.

I, III and IV

C.

I, II and IV

D.

All of the above

Question 178

Section B (2 Mark)

Basic Idea of retirement benefit plan is

Options:

A.

To meet lump sum needs immediately at retirement

B.

Provide regular income during retirement plan

C.

Take care of inflation

D.

All of the above

Question 179

Section B (2 Mark)

Number One Flight Stock currently sells for Rs53. A one-year call option with strike price of Rs58 sells for Rs10, and the risk free interest rate is 5.5%. What is the price of a one-year put with strike price of Rs58?

Options:

A.

Rs. 10.00

B.

Rs. 12.12

C.

Rs. 16.00

D.

Rs. 11.97

Question 180

Section B (2 Mark)

A hedge fund manager purchases 10 convertible bonds with a par value of $1,000, a coupon of 7.5%, and a market price of $900. The conversion ratio for the bonds is 20. The conversion ratio is based on the current price of the underlying stock, $45, and the current price of the convertible bond. The delta, or hedge ratio, for the bonds is 0.4.

Therefore, to hedge the equity exposure in the convertible bond, the hedge fund manager must short the following shares of underlying stock:

Options:

A.

80

B.

100

C.

200

D.

360

Question 181

Section A (1 Mark)

A(n) _____________ is an assurance that investors will be repaid in the event of the default of the underlying loans in a securitization. These can be internal or external to the securitization process and lower the risk of the securities.

Options:

A.

Special Purpose Vehicle

B.

Credit enhancement

C.

Stand line of credit

D.

Credit Default Swap

Question 182

Section A (1 Mark)

Manav saves Rs. 20,000/- a year for 5 years and Rs. 30,000/- a year for 10 years thereafter. What will be the total amount in his account after 15 years, if ROI is 10 % per annum?

Options:

A.

784823.87

B.

694823.87

C.

894823.87

D.

794823.87

Question 183

Section C (4 Mark)

Mr. Vinay, aged 36 years is working in a company, at a managerial level, and has an income of Rs. 40,000 p.m. comprising of Basic salary and DA as on 31/03/2008. His other allowances amount to Rs. 18,000 p.m. He would retire at the age of 60 years. His wife Reena, aged 32 years, is working in a High School and has a post-tax income of Rs. 2,76,000 per annum. Mr. and Mrs. Vinay have two daughter Deepika, aged 10 years and Rekha, aged 5 years.

Mr. Vinay’s father died of heart attack, 5 months back, at the age of 72 years, leaving a house (Value as on date Rs. 30 lakh) in which Vinay is staying at present and other assets worth Rs. 20 lakh (shares of large cap companies worth Rs. 10 lakh, Fixed deposit in post office of Rs. 5 lakh and Bank FD of Rs. 5 lakh) in Vinay’s mother’s name. His mother 63 years old is disabled and fully dependent on Vinay, he being the only child of his parents. Vinay has to keep an attendant for his mother, round the clock.

The Assets of the Couple are:

1.Cash in HandRs. 18,000

2.Bank balanceRs. 40,000 (Vinay) Rs. 25,000 (Reena)

3.JewelleryRs. 400000 (Reena)

4.Money Market Mutual FundRs. 3,00,000 (Vinay)

5.Shares

?ICICI Bank 200 shares bought at Rs. 1000 per share,

?Infosys 150 shares bought at Rs. 1700 per share

?Reliance Communication 350 shares bought at Rs. 350 share.

6.Debt oriented mutual FundsRs. 2,00,000

7.PPFRs. 5,00,000 (Vinay), Rs. 4,00,000 (Reena)

8.House in the joint name of Vinay and Reena with 50% ownership of each. This house has two floors and is let out for Rs. 9,000 pm for each of the floors. Present value of this house is Rs. 60,00,000.

Vinay and Reena had taken a housing loan of Rs. 15,00,000 each. Of this Rs. 10,00,000 is pending on each name. They are presently paying an EMI of Rs. 20,000 each, Rate of interest being 10.75% p.a.

The Retirement Benefits of Vinay after 15 years hence, are expected to be as follows:

Vinay has taken a term insurance of Rs. 30 lakh for 20 years, which is expiring 5 years from now. He has no other insurance. Vinay’s monthly household/ living expenses are Rs. 50,000. This excludes EMI on loans but includes all other expenses including expenses on his mother’s care.

Vinay expects Deepika to get married 12 years hence for which likely expenditures in today’s term is 15 lakh.

Vinay’s salary is likely to grow at 7% pa and Reena’s salary is likely to grow at 6% p.a. Risk free rate of interest is 8% pa and inflation is 6% p.a. Long term growth on Equity/Equity based MF is taken as 15% p.a.

Options:

Question 184

Section C (4 Mark)

Read the senario and answer to the question.

Which types(s) of investment(s), would be consistent with their retirement goal?

Options:

A.

(I) only

B.

(I) and (IV) only

C.

(I) and (III) only

D.

(II) and (IV) only

Question 185

Section A (1 Mark)

Which of the following services are related to the field of Real Estate?

Options:

A.

Appraisal and Brokerages

B.

Property Development

C.

Property management & Relocation service

D.

All of the above

Question 186

Section C (4 Mark)

Two friends Neeraj and Kapil, both belonging to the 33.66% tax bracket, have invested Rs. 10 lakhs in a debt-based scheme. The scheme is a regular run of the mill, assembly line product — nothing extraordinary about it.

The scheme has earned a distributable profit of 12%.

Kapil’s financial condition is not good and due to the business losses his assets are to be auctioned.

Neeraj is working in MNC and getting an annual package of Rs. 18 lakhs. This includes Rs. 270000 as dearness allowance (2/3 forms the part of retirement benefit). He is also earning an agricultural income of Rs. 54000.His expenses are Rs. 80000 per month.

Neeraj has also taken a housing loan in joint name of his wife Anita and himself. Property is also in the joint name and their contribution is equal. Annual outflow towards housing loan in terms of repayment of principal and interest is Rs. 300000. Out of this Rs. 198800 is toward interest.

Neeraj has also invested an equal amount in a portfolio consisting of securities A and B. Standard deviation of A is 12.43%; Standard deviation of B is 16.54%; Correlation coefficient is 0.82

Assets held by Neeraj

Options:

Question 187

Section B (2 Mark)

An investment opportunity having a market price of Rs. 100,000 is available. You could obtain a Rs. 75,000, 25-year mortgage loan requiring equal monthly payments with interest at 9.5 percent. The following operating results are expected during the first year.

What is the Overall capitalization rate?

Options:

A.

16%

B.

25%

C.

12%

D.

33%

Question 188

Section A (1 Mark)

The borrower's attitude toward his or her credit obligations is called:

Options:

A.

Capacity.

B.

Capital.

C.

Character.

D.

Collateral.

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Total 1259 questions