CWM_LEVEL_2 Exam Dumps - Chartered Wealth Manager (CWM) Certification Level II Examination
Section A (1 Mark)
Which of the following is an effective strategy in times of falling interest rates?
Section C (4 Mark)
Suppose Nifty is at 4450 on 27th April. An investor, Mr. A, enters into a short straddle by selling 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 4293
• If Nifty closes at 5158
Section A (1 Mark)
Which of the following is an element of an organization’s internal-environment?
Section B (2 Mark)
You are considering the purchase of a quadruplex apartment. Effective gross income (EGI) during the first year of operations is expected to be Rs33,600 (Rs700 per month per unit). First-year operating expenses are expected to be Rs. 13,440 (at 40 percent of EGI). Ignore capital expenditures. The purchase price of the quadruplex is Rs. 200,000. The acquisition will be financed with Rs60,000 in equity and a Rs. 140,000 standard fixed-rate mortgage. The interest rate on the debt financing is eight percent and the loan term is 30 years. Assume, for simplicity, that payments will be made annually and that there are no up-front financing costs.
What is the overall capitalization rate?
Section B (2 Mark)
In 2011-12, George has property income of £8,000 and net bank interest of £4,000. He claims the personal allowance of £7,475. What is the income tax borne for the year?
Section A (1 Mark)
Mr. Naresh is working in a reputed company and earning Rs. 5,00,000/- p.a. and is now 50 years old. He has invested Rs. 2,50,000/- in an annuity which will pay him after 5 years a certain amount p.a. at the end of every year for 10 years. Rate of interest is 8% p.a. Calculate how much he will receive at the end of every year after 5 years?
Section B (2 Mark)
An assessee was allowed deduction of unrealized rent to the extent of Rs. 40,000 in the past although the total unrealized rent was Rs. 60,000. He is able to recover from the tenant Rs.45,000 during the previous year on account of such unrealized rent. He shall be liable to tax to the extent of:
Section A (1 Mark)
A market timing approach that increases the proportion of funds in stocks when the stock market is expected to be rising, and increases cash when the stock market is expected to be falling is a:
Section C (4 Mark)
Read the senario and answer to the question.
What would be the taxable amount on gratuity received by Jogen, if he would retired from an organization where employees are not covered under Gratuity Act?
Section B (2 Mark)
If Raman Industries Ltd. share price is Rs.50 and its current dividend is Rs.5/- per share which is growing at 7 percent rate per year, determine its required return?
Section A (1 Mark)
An arbitrage opportunity exists if an investor can construct a __________ investment portfolio that will yield a sure profit.
Section B (2 Mark)
A disadvantage of using swaps to control interest rate risk is that
Section A (1 Mark)
The basic competitive factors facing industries include all of the following except:
Section B (2 Mark)
Mr. Murti is working in a reputed company and earning Rs. 4,00,000/- p.a. and is now 50 years old. He has invested Rs. 1,50,000/- in an annuity which will pay him after 5 years a certain amount p.m. at the beginning of every month for 10 years. Rate of interest is 8% p.a. Calculate how much he will receive at the beginning of every month after 5 years?
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)?
Section A (1 Mark)
In traditional approach to client servicing ,product offers were determined prior to analysis of client needs where as in Need Based approach a firm looks at book of business, and existing and targeted clients to assess its own core competencies and offerings
Section C (4 Mark)
To create a common size income statement ____________ all items on the income statement by ____________.
Section B (2 Mark)
Lalit wants to sell a property for Rs.20 lakhs. He is earning rent from tenant Rs.2,15,000. He is spending following amounts annually on that property
The value of the property would be:
Section B (2 Mark)
You are estimating the value of a small office building. Suppose the estimated NOI for the first year of operations is Rs100,000. a. If you expect that NOI will remain constant at Rs100,000 over the next 50 years and that the office building will have no value at the end of 50 years, what is the present value of the building assuming a 12.2% discount rate?
Section C (4 Mark)
Assume the following;
With this agreement, every 6 months, the transfer of funds takes place between fixed rate payer and floating rate payer.
What would Net Cash flows after 6-months from the initiation date?
Section B (2 Mark)
Mr. L Singh used machinery in his business. This is the only asset in the block. 20% of the usage is for personal purposes. The WDV of the block as on 31.3.2011 is —
Section C (4 Mark)
Belstate reported net income of Rs221 million in 1993 on revenues of Rs8298 million. It paid out 31% of its earnings as dividends, a payout ratio that is expected to remain level from 1994 to 1998, during which period earnings growth is expected to be 13.5%. After 1998, earnings growth is expected to decline to 6%, and the dividend payout ratio is expected to increase to 60%. The beta is 1.15 and this figure is expected to remain unchanged. The treasury bill rate is 7%.
Estimate the price/sales ratio for Walgreens, assuming its profit margin remains unchanged at 1993 levels.
Section A (1 Mark)
The Eligibility Criteria for Personal Loans for Self Employed Professionals & Businessman in India states that the minimum age of the applicant should be:
Section A (1 Mark)
A ____________________ tax system places a relatively large tax burden on lower-income people and a relatively small tax burden on upper-income people.
Section A (1 Mark)
The __________the suggested deviation from the rational portfolio asset allocation, the _________ the need to mitigate the investor’s behavioral biases
Section A (1 Mark)
Which of the following is/are the challenges of Private Banking?
Section A (1 Mark)
Pure premium and Loss Ratio methods are two methods to determine
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.
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 _____________.
Section A (1 Mark)
Financial Gerontology tries to assess client needs based on __________
Section A (1 Mark)
________________ is the most important source of revenue for local governments in US
Section B (2 Mark)
Which of the following factors affect the price of a stock option?
Section A (1 Mark)
A(n) _________________________ combines a normal debt instrument with a credit option. It allows the issuer of the debt instrument to lower its loan repayments if some significant factor changes.
Section A (1 Mark)
Essential requirement for the person who can attest the will is that he
Section A (1 Mark)
The length of the insurance industry’s business cycle is shortened because of
Section A (1 Mark)
An aggressive asset allocation would contain larger proportions of __________ than a conservative allocation.
Section C (4 Mark)
Azhar deposits Rs. 12,500 in an account that pays a ROI of 20% p.a compounded annually on 5th. Of March 2010. Calculate the date on which the balance in his account would be Rs.35,338/-
Section B (2 Mark)
The basic rate of income tax on non-savings incomein UK for tax year in 2011-12 is:
Section A (1 Mark)
Deduction u/s 80U in case of permanent physical disability (including blindness) allowed to:
Section A (1 Mark)
Holistic advisory services which cater to specific client segments such as entrepreneurs, professionals are known as_______________.
Section A (1 Mark)
The organizations make their special offer to the customers who will provide the highest profit margins, greatest response rate and __________.
Section A (1 Mark)
In Working Capital Finance, what should be the minimum current ratio the borrower needs to ensure the compliance under the first method of lending.
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
Section A (1 Mark)
The critical variable in the determination of the success of the active portfolio is ________.
Section B (2 Mark)
The two aspects of Regret bias are_____________ and _____________.
Section A (1 Mark)
Mr. X’s minor daughter earned Rs. 50000 from his special talent. This income will be clubbed with
Section A (1 Mark)
Manish started investing in a savings scheme by depositing Rs. 30,000/-. He plans to increase his contribution every year by Rs. 2,000/-. If rate of interest offered in this scheme is 8 % per annum calculate the amount Manish will get on maturity of this scheme after 15 years?
Section C (4 Mark)
Read the senario and answer to the question.
Sajan and Jennifer want to accumulate funds for their vacation expenses as per their determined goal. They want to invest a fixed amount immediately from the Bonus amount he has received, and then in the beginning of every financial year till April, 2020 in a separate scheme of an Equity Mutual Fund. He would withdraw the required amount annually as adjusted for inflation from the Scheme from April, 2021 till April, 2036 for undertaking vacation trips. What approximate amount should be invested every year to achieve this goal?
Section B (2 Mark)
Mr. Jain is projecting an income stream providing Rs. 2,000/- for first 3 months, Rs. 3,200 for next 2 months, Rs. 4,500 for next 1 month, Rs. 3,700 for next 6 months and Rs. 800 for 2 months thereafter. EACH CASH FLOW starts from the beginning of the month. Please calculate the Present Value of this cash stream if rate of interest is 9 % per annum compounded monthly?
Section A (1 Mark)
The income received by the approved superannuation fund on the investments made by the fund is
Section B (2 Mark)
An appraiser estimates that a property will produce NOI of Rs 25,000, the Yo is 11 percent, and the growth rate is 2.0 percent. What is the total property value (unrounded)?
Section A (1 Mark)
Land plus anything permanently fixed on it, including building, sheds and other items attached to the structure refers to _____.
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:
Section A (1 Mark)
_____________allow investors to increase diversification in direct real estate holdings by investing in groups of real estate projects.
Section A (1 Mark)
Which among the following is not an advantage of setting up a trust?
Section C (4 Mark)
Read the senario and answer to the question.
Assuming that Mahesh owns a building which he insures along with its contents for Rs. 12 lakh. However the market value of the building and its content is Rs. 15 lakh. Assuming that the building along with its contents is partially destroyed by fire and the loss assessed of Rs. 1 lakh what is the amount of money insurance company would pay as claim reimbursement to Mahesh?
Section C (4 Mark)
Suppose you have decided to sell your house and downsize by acquiring a townhouse that you have been eyeing for several years. You do not feel extreme urgency in selling your house; but the associated taxes are eating into your monthly cash flow, and you want to unload the property as soon as possible. Your real estate agent, whom you have known for many years, prices your home at Rs 90,00,000—you are shocked.
You paid Rs 250,000 for the home only 15 years ago, and the Rs 900,000 figure is almost too thrilling to believe. You place the house on the market and wait a few months, but you don’t receive any nibbles. One day, your real estate agent calls, suggesting that the two of you meet right away. When he arrives, he tells you that Pharma Growth, a company that moved into town eight years ago in conjunction with its much-publicized initial public offering (IPO), has just declared bankruptcy.
Now, 7,500 people are out of work. Your agent has been in meetings all week with his colleagues, and together they estimate that local real estate prices have taken a hit of about 10 percent across the board. Your agent tells you that you must decide the price at which you want to list your home, based on this new information. You tell him that you will think it over and get back to him shortly.
Assume your house is at the mean in terms of quality and salability.
What is your likeliest course of action if you exhibit Anchoring and Adjustment bias?
Section C (4 Mark)
Read the senario and answer to the question.
You have reviewed the investments of Nimita for the purview of retirement. You advise that a balance be restored from risk perspective and accordingly Rs. 15 lakh be shifted to a Debt MF scheme. You advise to further start SIPs immediately in the ratio of 60:40 in the newly started debt MF scheme and the existing Equity MF scheme for the next 21 years to accumulate a corpus so that the same sustains for the next 25 years if invested in an investment instrument yielding 7.50%. What approximate amount of SIPs should be made in Debt and Equity MF schemes?
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%?
Section C (4 Mark)
Which of the following firms is likely to have the same value from both models?
Section A (1 Mark)
____________represents people’s propensity to claim an irrational degree of credit for their successes.
Section C (4 Mark)
Shikha has an 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 goes up by 20%, what should Shikha do?
Section A (1 Mark)
Single men trade far more often than women. This is due to greater ________ among men.
Section A (1 Mark)
A bank is considering making a loan to Ram Kapoor. Ram has a gross salary per month of Rs40500 but has take-home pay of Rs27500 per month. What aspect of evaluating a consumer loan application is this fact most concerned with?
Section A (1 Mark)
Select the correct statement regarding the market portfolio. It:
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…..
Section C (4 Mark)
An investor purchased on margin Alpha Computer for Rs. 30/- a share. The stock's price subsequently rose to Rs. 50/- a share at which time the investor sold the stock. If the margin requirement is 60 percent and the interest rate on borrowed funds was 7 percent, what would be the percentage earned on the investor's funds (excluding commissions)? What would have been the return if the investor had not bought the stock on margin?
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?
Section A (1 Mark)
Which of the following statements regarding debit and credit card liability is correct?
Section C (4 Mark)
A share pays nil dividend and its current market price is Rs.100. The possible selling prices at the end of a year and the probabilities are:
What is the expected rate of return at the end of the year?
Section A (1 Mark)
The tendency, after an event has occured, to think that we knew what was going to happen beforehand. We overestimate the likeliness that we would have been able to predict the outcome of a past series of events. Which of the following is most likely consistent with this bias?
Section B (2 Mark)
What is the expected percentage price change for a bond with an effective duration of nine in response to an increase in yield of 30 basis points?
Section C (4 Mark)
National City Corporation, a bank holding company, reported earnings per share of Rs2.40 in 1993, and paid dividends per share of Rs1.06. The earnings had grown 7.5% a year over the prior five years, and were expected to grow 6% a year in the long term (starting in 1994). The stock had a beta of 1.05 and traded for ten times earnings. The treasury bond rate was 7%.
Estimate the P/E Ratio for National City Corporation and the long term growth rate that is implied in the firm's current P/E ratio.
Section B (2 Mark)
Total income for assessment year 2012-13 of an individual including long-term capital gain of Rs. 60,000/- is Rs. 1,80,000/-. The tax on total income shall be: [CII-12-13: 852,11-12: 785,10-11:711]
Section C (4 Mark)
Zenith Finance is a big financial firm which owns several mutual funds. The funds are managed individually by portfolio managers but it has an investment committee that oversees all of the funds. This committee is responsible for evaluating the performance of the funds relative to the appropriate benchmark and relative to stated investment objectives of each individual fund. During a recent investment committee meeting, the poor performance of its Equity Funds were discussed. In particular, the inability of the portfolio managers to outperform their benchmarks was highlighted. The net conclusion of the committee was to review the performance of the manager responsible for each fund and dismiss those managers whose performance had lagged substantially behind the appropriate benchmark.
The fund with the worst relative performance is the Zenith Large Cap Fund which invests in large cap stocks. A review of the operations of the fund found the following:
• The turnover of the fund was almost double that of other similar style mutual funds
• The fund’s portfolio manager solicited input from her entire staff prior to making any decision to sell an existing holding
• The beta of the Zenith Large Cap Fund’s portfolio was 65% higher than the beta of other similar style mutual funds
• The portfolio manager refuses to increase the Capital Goods sector weighting because of past losses the fund incurred in the sector
• The portfolio manager sold all the fund’s Oil Marketing Companies stocks as the price per barrel of oil rose above $105. He expects oil prices to fall back to the $80 to $85 per barrel
• No stock is considered for purchase in the Large Cap Fund unless the portfolio manager has 10 years of financial information on that company.
A committee member made the following 2 comments:
Comment 1: “One reason for the poor performance of Large Cap Mutual Fund is that the portfolio lacks recognizable companies. I believe that good companies make good investments
Comment 2: “The portfolio manager of the Large Cap Fund refuses to acknowledge his mistakes. He seems to sell stocks that appreciate, but she holds stocks that have declined in value
The two behavioral biases exhibited respectively in the above 2 comments from the committee are:
Section A (1 Mark)
…………………. Is implied in favor of the party creating it
Section C (4 Mark)
Amit an industrialist wants to buy a flat in a housing society presently costing Rs. 35,00,000/- after 6 years. The cost of the house is expected to increase by 15% p.a for the first 3 years and by 10% in the remaining years. Amit wants to start a SIP with monthly contributions in Birla Front Line Equity Mutual Fund to pay for the down payment of the house which would be 25% of the house value at that time. You as a CWM expect that the fund would give ROI of 14% p.a. compounded monthly in the next 10 years. Please advise Amit the monthly SIP amount starting at the beginning of every month for the next 6 years to fulfill his goal of buying the Flat he desires.
Section B (2 Mark)
An asset may be purchased for Rs 10,00,000. It is expected to generate Rs 10,000 annual income for 10 years after which it is expected to sell for Rs. 1,20,000. What is the rate of return expected from this investment?
Section A (1 Mark)
CRM as a discipline that depends on people, process, information and __________
Section A (1 Mark)
Minimum number of employees in an establishment for it to come under the purview of the Payment of Gratuity act is ______
Section B (2 Mark)
Which of the following statements is TRUE concerning zero coupon bonds?
Section A (1 Mark)
Companies can build interest and enthusiasm by using databases to remember customer preferences. This strategy helps to which of the following?
Section C (4 Mark)
Mr. Peter sells a Nifty Put option with a strike price of Rs. 4000 at a premium of Rs. 21.45 and buys a further OTM Nifty Put option with a strike price Rs. 3800 at a premium of Rs. 3.00 when the current Nifty is at 4191.10, with both options expiring on 31st July.
What would be the Net Payoff of the Strategy?
• If Nifty closes at 3800
• If Nifty closes at 4500
Section A (1 Mark)
A(n) _____________ is related to the credit option and is usually aimed at lenders able to handle comparatively limited declines in value but wants insurance against serious losses.
Section B (2 Mark)
As a CWM you are considering the following bond for inclusion in the fixed income portfolio of your client:
What will be the duration of this bond? and What will be the effect of the changes on the duration of the bond if the coupon rate is 6% rather than 9%?
Section A (1 Mark)
If a portfolio manager consistently obtains a high Sharpe measure, the manager's forecasting ability __________.
Section C (4 Mark)
Read the senario and answer to the question.
Assuming his son gets average marks in class 10th when he was just 15 years old, his father decided to send him abroad for further studies at age 21.calculate the amount that Mr. Mehta requires to invest in excess of the amount accumulated in previous question during next six years to accumulate a fund of Rs. 500000?
Section A (1 Mark)
______________ is a manifestation of mental accounting that can cause people to take on more risk as their wealth increases.
Section C (4 Mark)
Which of the following application of Options Strategy is correct?
Section B (2 Mark)
An employee who is not resident in the UK will be liable to UK income tax:
Section C (4 Mark)
Mr. Jogen 57 years and 8 months old and going to retire after few months at the age of 58 years (after completing 33 years and 9months of service) is working as an assistant secretary in petroleum ministry. He is interested in making investments in Equity Market. Jogen purchased 100 shares of SBI Ltd. for Rs. 1,250/- per share at the beginning of the current financial year. It paid dividends of Rs. 20 per share over the year (February-08) and he sold the stock for Rs. 1,975 at the end of the year. His two children are well settled. He is staying in his own flat and has paid last installment of loan. He gets a salary of Rs. 48,000 p.m. After retirement he will get a pension of Rs. 16,000 p.m. His present (October -2007) household expenses per month are Rs. 22,000 and want to maintain same standard of living. His post-retirement expenses will be 95% of his last month’s expenses at retirement.
The present values of his physical assets are as below:
His financial assets are as follows:
He will get following amounts on his retirement:
Section A (1 Mark)
Income which accrue or arise outside India but are received directly in India are taxable in case of:
Section C (4 Mark)
Rate of 15% p.a compounded annually will be equal to ---------------- % per month.
Section B (2 Mark)
On 1st January 2011, Mr. Dutt took a personal loan of Rs.1,00,000/- for a period of 3 years at an 21% rate of interest. The loan is to be on monthly EMI on monthly reducing balance method.
What about be interest and principal amount to be paid in October 2013?
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?
Section A (1 Mark)
Which of the following are the advantages of a Credit Union:
Section C (4 Mark)
Consider the following information for three mutual funds
Risk free return is 7%. Calculate Treynor measure?
Section B (2 Mark)
Why do share prices usually drop when news about decline in a company’s earnings per share is reported?
Section B (2 Mark)
Which of the following two outcomes is an example of Loss Aversion Bias:
Section A (1 Mark)
Following is/ are the component(s) of Personal Financial Statements
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 rate.
Section B (2 Mark)
An investor is bearish about Tata Motors and sells ten one-month ABC Ltd. Futures contracts at Rs.6,06,000. On the last Thursday of the month, Tata Motors closes at Rs.600. He makes a _________. (assume one lot = 100)
Section A (1 Mark)
A financial contract that obligates one party to exchange a set of payments it owns for another set of payments owned by another party is called a
Section B (2 Mark)
Ramesh living in Kolkata is a trustee for Brijesh living in Mumbai, Ramesh remits trust funds to Brijesh by bills drawn by a person of high creditworthiness in favor of the trustee as such and payable at Mumbai. The bills later got dishonored. Is Ramesh bound to make good the loss?
Section C (4 Mark)
Read the senario and answer to the question.
Vinay wants to have 80% of the desired retirement corpus from his monthly savings from now itself. If he expects to earn 12% p.a. on these savings, how much amount should the couple save at the end of each month to achieve this target?
Section C (4 Mark)
Read the senario and answer to the question.
Calculate the Solvency ratio?
Section A (1 Mark)
A(n)____________________________________________ is where the customer can use the difference between some percentage of the appraised value of their home and the mortgage remaining to secure a loan. This loan can be used to fund a college education, pay for a vacation or pay for home improvements.
Section A (1 Mark)
In case of Credit Assessment, if the lender accepts the application and takes it forward towards acceptance provided it passes through the risk assessment criterion, then the Credit Score Band of the borrower would be:
Section B (2 Mark)
Miss Femina aged 17, is married to Mr. Masculine. Her mother alone is alive income by way of interest on loans, of Miss Femina will be:-
Section C (4 Mark)
Read the senario and answer to the question.
Raman has invested Rs. 1,50,000, 30% of which is invested in Company A, which has an expected rate of return of 15%, and 70% of which is invested in Company B, with an expected return of 12%. What is the expected percentage rate of return?
Section B (2 Mark)
In a collateralized mortgage obligation (CMO) a tranche:
Section C (4 Mark)
Read the senario and answer to the question.
Raman’s company has made plans for the next year for a new project. It is estimated that the company will employ total assets of Rs. 900 lakh, 75% of the assets being financed by borrowed capital at an interest cost of 6% per year. The direct costs are estimated at Rs. 530 lakh. All other operating expenses are estimated at Rs. 95 lakh. The goods will be sold to customers at 150% of the direct costs. Income tax rate is assumed to be 30%. Calculate net profit margin and return on owners’ equity.
Section B (2 Mark)
Calculate the beta on a portfolio from the following data:
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:
â—To provide for his daughter’s marriage
â—Ensuring that his family is protected financially in the event of any mishap
â—Minimize tax burden
â—Establish an investment portfolio that gives high returns over long term
Assumptions:
â—Mr. Adhikari needs to provide for himself and his family till he is 75.
â—Inflation rate after retirement to be 4%
â—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.
Section A (1 Mark)
Independent Individualist has __________ risk tolerance
Section A (1 Mark)
Conventional theories presume that investors ____________ and behavioral finance presumes that they ____________.
Section C (4 Mark)
Your broker recommends that you purchase XYZ Inc. at Rs.60. The stock pays a Rs.2.40 dividend which (like its per share earnings) is expected to grow annually at 8 percent. If you want to earn 12 percent on your funds, is this a good buy?
Section B (2 Mark)
A perspective on decision making based on the assumption that people typically show risk aversion; hence, when making decisions they view whatever losses may be involved as more painful than equivalent gains are desirable. We have an irrational tendency to be less willing to gamble with profits than with losses.
Section A (1 Mark)
In US which of the following does not count as an itemized deduction on income tax?
Section B (2 Mark)
Amit has just received new information regarding his investment in PLC ltd. The new information appears to be in conflict with earlier forecast of what the stock price should be at this point. He is still willing to incorporate the new information into his forecast and to revise it accordingly.
Which behavioral heuristic is Amit displaying?
Section A (1 Mark)
Which of the following services are related to the field of Real Estate?
Section C (4 Mark)
Read the senario and answer to the question.
If Mahesh extends his retirement age to 65, what is the annual saving required in the beginning of every year if his post retirement expenses are 85% of his pre-retirement expenses?
Section B (2 Mark)
___________ applies where there are multiple transactions which are inter-related and cannot be evaluated separately for the purpose of determining arm’s length price of any one transaction.
Section A (1 Mark)
Aditya’s father has given him general power of attorney what does this mean?
Section A (1 Mark)
Wages for the purpose of gratuity payment as per the Act means
Section A (1 Mark)
An activity is presumed to be a profit-making activity rather than a hobby if the
Section B (2 Mark)
In US which form tells your employer all they need to know about your tax-related allowance information?
Section B (2 Mark)
Equity stock of X ltd. is currently selling at Rs. 35/- per share. The dividend expected next year is Rs. 2/- per share and the investor’s required return in this stock is 15 % per annum. If the constant Growth Model applies to X ltd. then calculate the Growth Rate.
Section B (2 Mark)
A collar with a net outlay of approximately zero is an options strategy that
Section A (1 Mark)
Accumulation, preservation and distribution are stages of
Section A (1 Mark)
A bank is considering making a loan to Jitesh Desai. Jitesh is a commissioned sales broker. Some months he earns as much as Rs 1,00,000 and in other months he earns virtually nothing. Which aspect of evaluating a consumer loan would this be concerned with?
Section A (1 Mark)
Which one of the above statements is/are not a important needs of clients in the context of relationship management:
Section A (1 Mark)
The proposed Fair Tax would change the U.S. tax system and instead:
Section A (1 Mark)
Which of the Following needs to register as an' Investment Adviser' as per SEBI Investment Advisor Regulations 2013.
Section C (4 Mark)
Mr. Amit Jain has bought a house today which cost him Rs. 50 lacs by taking a loan of 30lacs for 15 years at 11% per annum compounded monthly. He currently has 10 lacs of financial assets and plans to save Rs. 3.25 lacs every year at the beginning of the year for the next 5 years. All his investments are expected to grow at a ROI of 15%per annum compounded quarterly. What will be the net worth of Mr. Amit after 5 years if the value of the house after 5 years is expected to be 75 lacs.
Section B (2 Mark)
What is the monthly payment size of a 23-year mortgage for Rs165 600 and an interest rate of 5.25% compounded semi-annually?
Section A (1 Mark)
_________________ is a method to evaluate a large volume of consumer loans quickly with minimum labor. This method is a statistical model which predicts whether the consumer will repay the loan or not.
Section A (1 Mark)
Acquiring the Right Customers, based on known characteristics, which drives growth and increased profit margin, is a benefit of __________
Section C (4 Mark)
Read the senario and answer to the question.
By calculating HLV of Mahesh indicate the shortfall in his life insurance coverage using the given data:
Mr. Mahesh age 52, retirement age 60, paying professional tax of Rs. 5800 and income tax subject to allowable deductions as Rs. 230000, reasonable self maintenance expenditure estimated Rs. 140000 p.a., life insurance premium for self Rs. 25000 with total sum assured Rs. 1200000. He also pays insurance premium of Rs. 15500 and Rs. 7000 for life insurance policy of his wife and son respectively. Rate of interest assured for capitalization of future income is at 7%
Section A (1 Mark)
Garima deposits Rs. 2,000/- every month in an account and is getting interest @ 12 % per annum compounded monthly. How much will be her nest egg after 10 years ?
Section A (1 Mark)
What is the crucial determinant of value of a property?
Section B (2 Mark)
The employer had purchased a car for Rs. 3,00,000 which was being used for official purposes. After 2 year 6 months of its use, the car is sold to R, the employee, for Rs. 1,20,000. The value of this perquisite shall be
Section A (1 Mark)
The trust which is empty at creation during life and tranfers the property into the trust at death is called ____________
Section A (1 Mark)
All of the following are assumptions made by technical analysts except:
Section A (1 Mark)
Amit has monthly net income of Rs10500. He has a house payment of Rs 4500 per month, a car loan with payments of Rs 2500 per month, a Visa card with payments of Rs 500 per month, and a credit card with a local department store with payments of Rs 1000 per month.
What is Amit's debt payments-to-income ratio?
Section A (1 Mark)
If an investor searches for patterns in security returns by examining various techniques applied to a set of data, this is known as:
Section B (2 Mark)
Resident but not ordinary resident (RNOR) is ____________ on Indian Income and ___________ on Foreign Income.
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?
Section A (1 Mark)
_______________ and _______________ mandates are two kinds of service level contracts
Section C (4 Mark)
Mr. Vivek Kalra deposits Rs.11,00,000 today in an investment that would pay after 6 years Rs. 1,00,000 per year for 5 years and Rs. 1,50,000 for the next 5 years. What would be the balance in the account after the last payment is made if the ROI is 18% per annum compounded annually?
Section A (1 Mark)
Operational customer relationship management supports which of the following function?
Section B (2 Mark)
How much should you pay for a share of stock that offers a constant growth rate of 10%, requires a 16% rate of return, and is expected to sell for Rs50 one year from now?
Section A (1 Mark)
……………………is a gift in the form of a single transfer to the same person of several things of which one is and the others are not burdened by an obligation, the done can take nothing by the gift unless he accepts if fully.
Section B (2 Mark)
A dealer sold one January Nifty futures contract for Rs.250,000 on 15th January. Each Nifty futures contract is for delivery of 50 Nifties. On 25th January, the index closed at 5100. How much profit/loss did he make ?
Section A (1 Mark)
The eligibility Criteria for Self Employed Professionals & Businessman for minimum annual income of the applicant in case of personal loan is:
Section A (1 Mark)
____________refers to the tendency of people to think of currency in nominal, rather than real terms
Section A (1 Mark)
If a testator makes a will ‘to induce another person to make him comply with his (testators) wish’ but does not have any testamentary operation or intention, then this will is called as
Section C (4 Mark)
Read the senario and answer to the question.
In order to provide for Medical Education Expenses of Navneet he will be transferring whole of Equity share portfolio to Debt MF. And for Yogita’s PG degree he is ready to use his Equity MF portfolio. Balance to be met by SIP in equity MF. Starting from today. You are required to guide Keshav whether he will be able to meet Navneet’s Education Expand what is the surplus or deficit in Debt MF (today value). And what should be the SIP amount for Yogita’s Education goal?
Section A (1 Mark)
An investor will take as large a position as possible when an equilibrium price relationship is violated. This is an example of _________.
Section B (2 Mark)
A project should be considered if the Profitability Index is
Section A (1 Mark)
__________ is the most important investment decision because it determines the risk-return characteristics of the portfolio.
Section A (1 Mark)
For claiming exemption u/s 54G, the assessed shall acquire the new asset within:
Section B (2 Mark)
A Resident is defined as not Ordinarily Resident provided such individual has been: a non- resident in 9 out of 10 Financial Years preceding the current year or his stay in India totals to _________days or less in ___________financial years preceding the current year.