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AAFM CWM_LEVEL_2 Sample Question Answers

Question # 1

Read the senario and answer to the question. One commonly used method of calculating the total retirement fund necessary on the first day of retirement is to use the present value of an annuity due. The Pandeys’ anticipate that their annual retirement income will need to increase each year at the rate of inflation. Based on the following assumption, calculate the total amount needed to be in place when Shanker and Parvati retire (Round to the nearest Rs. 1000)

A. Rs. 878000 
B. Rs. 887000 
C. Rs. 896000 
D. Rs. 1792000

Question # 2

A bond has the following terms:  If you expect the bond to be called at the end of the year, what would be the maximum price you should pay for the bond if comparable yields are 7 percent? 

A. 1012.35 
B. 1024.39 
C. 1028.04 
D. 1016.19

Question # 3

Securities and Exchange Board of India (SEBI) performs three major functions to meet its objectives these are:

A. I, II, IV 
B. I, II, III 
C. II, III, IV
 D. I, III, IV

Question # 4

Which of the following application of Options Strategy is correct? 

A. I, II and III
 B. IV and V 
C. II, IV and V 
D. All of the Above 

Question # 5

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

A. I,III and IV 
B. II, IV
 C. Only V 
D. Only III 

Question # 6

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

A. Only I 
B. Only II 
C. Only III 
D. None of These

Question # 7

Manish is thinking of acquiring some shares of ABC Ltd. The rate of returns is as follows:  Calculate the expected return on the investments 

A. 7.6 
B. 9.5 
C. 5.2 
D. 1.6 

Question # 8

Which of the following statements is/are correct? 

A. I, II and III 
B. I, III and IV 
C. II, III and IV 
D. All of the above 

Question # 9

Given below is the portfolio return; calculate the expected portfolio rate of return: 

A. 9.25% 
B. 11% 
C. 9% 
D. 8.67%

Question # 10

The Puri’s family includes a financially well-informed couple, both aged 34, and two children aged 4 and 6. They are financially sound, but were not in the market during the Indian Bull market of the 2003 to 2007 as many of their neighbors were. The couple’s total income, Rs. 12,00,000, which they do not expect to grow significantly in times to come They have saved 15,00,000, which they hope will be the financial foundation from which they will send their children to college and retire comfortably.Which of the following biases does the Puri Family suffer from:?  

A. I,II,III and IV 
B. I,III and V 
C. II,IV and V 
D. III and IV 

Question # 11

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

A. I and II 
B. III and IV 
C. I, II and IV 
D. II, III and IV 

Question # 12

The Wilson Corporation has the following relationships:  What is Wilson’s profit margin and debt ratio? 

A. 2%; 0.33 
B. 4%; 0.33 
C. 4%; 0.67 
D. 2%; 0.67

Question # 13

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

A. 3% 
B. 4% 
C. 5% 
D. 6% 

Question # 14

Which of the following statements is/are correct? 

A. I and II 
B. I, II and IV 
C. III and IV 
D. All of the Above 

Question # 15

EMH frequently include, among others, assumptions such as: 

A. I and II 
B. II and III 
C. I and III
 D. All of the Above 

Question # 16

There are two parties to Power of Attorney, namely, Donor and Donee. 

A. Both (i) & (ii) are correct 
B. Only i is correct 
C. Only ii is correct
D. Both (i) & (ii) are incorrect

Question # 17

Which of the following statements is/are correct? 

A. I and II 
B. I ,II and IV 
C. III and IV 
D. All of the Above 

Question # 18

Which of the following statements is/are correct? 

A. I and II 
B. I, II and IV 
C. III and IV
 D. All of the Above 

Question # 19

An Asset allocation policy  

A. I and II 
B. I and III 
C. II and III 
D. None of the above

Question # 20

Which of the following statement is/are correct? 

A. (i) only 
B. (ii) only
 C. Both (i) & (ii) are correct 
D. Both (i) & (ii) are incorrect 

Question # 21

While choosing wealth management firms the criteria a client would consider include is/are: 

A. I and II 
B. I and III
 C. II and III 
D. All of the Above 

Question # 22

Which of the following statements is / are correct? 

A. I, II and III 
B. I, III and IV 
C. II, III and IV 
D. All of the above 

Question # 23

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

A. I, II and III 
B. I,III and IV 
C. I, II and IV 
D. All of Them 

Question # 24

Assume that you purchased 100 shares of ABC in a self directed account and paid a commission on the transaction. Shortly following the purchase, you realize that you momentarily overlooked another 100 shares of ABC that you already owned in another account. Now, the redundant holdings are causing an imbalance in your overall portfolio. What is your reaction to this situation, in case of Endowment Bias?

A. I
 B. II 
C. Both of the above
 D. None of the above 

Question # 25

Which of the following two outcomes is an example of Loss Aversion Bias: 

A. I 
B. II 
C. Both of the above 
D. None of the above

Question # 26

Which of the following statements are correct with regard to Bailard, Biehl, and Kaiser FiveWay Model?

A. I and II 
B. III and IV 
C. I and III 
D. All of the Above

Question # 27

The expected return for the market is 12 percent, with a standard deviation of 20 percent. The expected risk-free rate is 8 percent. Information is available for three mutual funds, all assumed to be efficient, as follows: Calculate the expected return on each of these portfolios respectively. 

A. 11%,11.4% and 11.80% 
B. 10.70%,11% and 11.25% 
C. 9%,9.50% and 10.50% 
D. 8.50%,10.50% and 10.80% 

Question # 28

An investor is considering the purchase of a small office building and, as part of his analysis, form the following given data calculate the Net Operating Income (NOI).

A. Rs. 2,10,000
 B. Rs. 1,97,500 
C. Rs. 1,93,500 
D. Rs. 1,83,750

Question # 29

Singhvi group has recently announced that expected dividends for the next three years will be as follows: For the subsequent years, management expects the dividend to grow at 5% annually. If the risk-free rate is 4.30%, the return on the market is 10.30% and the firm’s beta is 1.40. What is the maximum price that you should pay for this stock? 

A. Rs. 43.78 
B. Rs. 41.38 
C. Rs. 45.54 
D. Rs.59.41 

Question # 30

Select the INCORRECT statement regarding the CML 

A. I and II 
B. Only I 
C. Only II 
D. III and IV 

Question # 31

Which of the following statements are correct?  

A. I and II 
B. I and III 
C. III and IV 
D. I, II and III

Question # 32

Which one of the above statements is/are not a important needs of clients in the context of relationship management:

A. I and III 
B. II 
C. III and IV 
D. None of the Above 

Question # 33

Which one of the following statements is/are correct? 

A. (i) only 
B. (ii) only 
C. Both are correct 
D. Both are incorrect

Question # 34

Information processing errors consist of 

A. I and II 
B. I and III 
C. III and IV 
D. I, II and III 

Question # 35

Calculate the standard deviation on a portfolio from the following data 

A. 14.23
 B. 5.15
 C. 17.25 
D. 11.34 

Question # 36

Which of the following statement is/are correct? 

A. (i) only 
B. (ii) only 
C. Both (i) & (ii) are correct 
D. Both (i) & (ii) are incorrect 

Question # 37

Calculate the value at which an office building can be priced from the following information:  A similar building has 8% capitalization rate. 

A. Rs. 23,87,500 
B. Rs. 19,11,000
 C. Rs. 22,93,500
 D. Rs. 21,10,000 

Question # 38

Dyder System is a full-service truck leasing, maintenance, and rental firm. The following are selected numbers from the financial statements for 1992 and 1993 (in millions). The firm had capital expenditures of Rs800 million in 1992 and Rs850 million in 1993. The working capital in 1991 was Rs34.8 million, and the total debt outstanding in 1991 was Rs1.75 billion. There were 77 million shares outstanding, trading at Rs29 per share. Estimate the cash flows to the firm in 1992 and 1993(in Rs Millions)

A. (139.75) and 534.34 
B. 139.75 and (349.95) 
C. (139.75) and 349.95 
D. -84.20 and 251

Question # 39

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.

A. Rs 16.84 
B. Rs 31.14 
C. Rs 15.95 
D. Rs 17.75 

Question # 40

Which of the following statements with respect to Transfer Pricing is/are correct? 

A. I, II and III 
B. I and II 
C. II, III and IV 
D. I, III and IV 

Question # 41

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? 

A. 11% 
B. 46% 
C. 40% 
D. 20% 

Question # 42

Which of the following statements is/are true?  

A. I, II and III 
B. I,II and IV 
C. I, III and IV 
D. II,III and IV 

Question # 43

Consider the following information for three mutual funds  Risk free return is 6%. Calculate Treynor measure. 

A. 3.45, 7.78, 4.38 
B. 7.27, 6.67, 9.17 
C. 2.59, 8.68, 6.63 
D. 5.65, 8.88, 9.36 

Question # 44

Which of the following statement is/are correct?

A. Only (i) 
B. Only (ii) 
C. Both of the above 
D. None of the above 

Question # 45

Which one of the above statements is/are incorrect? 

A. (i) only 
B. (ii) only 
C. Both 
D. None of the above 

Question # 46

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

A. I,II,III 
B. II,III,IV 
C. I,III,IV 
D. All of the above 

Question # 47

Which of the following Statements are correct? 

A. II, III and IV 
B. I, II and III
 C. I and IV
 D. All of the above

Question # 48

Which of the following are the ways to avoid escalation of commitment are listed below? 

A. I and II 
B. II and III 
C. I and III 
D. All of the Above

Question # 49

From the following data calculate the expected rate of return of a portfolio in which A and B has weights equally: 

A. 12 
B. 17 
C. 14 
D. 11 

Question # 50

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? 

A. 16% 
B. 25% 
C. 12% 
D. 33% 

Question # 51

Which of the Following are the Negative Effects of Sample-Size neglect for investors 

A. I 
B. II 
C. Both of the above 
D. Neither of the above 

Question # 52

Which of the following statements is/are correct? 

A. Statement (I) only 
B. Statement (II) only 
C. Both Statements (I) and (II) 
D. None of the Statement 

Question # 53

Which of the following statement is/are correct? 

A. Only (i) an correct 
B. Only (ii) are correct 
C. Both 
D. None

Question # 54

Which of the following Biases are exhibited by Passive Preserver? 

A. I and II 
B. III and IV
 C. I and III 
D. All of the Above 

Question # 55

Which of the following is/are correct? 

A. Both A and 
B statements are true 
B. Statement A is true
 C. Statement B is true 
D. Both A and B are not true 

Question # 56

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

A. I, II and III 
B. I and IV 
C. II, III and IV 
D. All of the Above 

Question # 57

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

A. (I) only
 B. (I) and (IV) only
 C. (I) and (III) only
 D. (II) and (IV) only 

Question # 58

Which of the following firms is likely to have the same value from both models? 

A. I, II and V 
B. II and III 
C. I and III 
D. IV and V 

Question # 59

The Sachdeva family includes a financially well-informed couple, both aged thirty-two, and two children aged four and six. They are financially sound, but were not in the market during the bull market of the 2003 to 2007 as many of their neighbors were. The couple’s total income, Rs.12,00,000 which is not expected to grow significantly. They have saved Rs.15,00,000, which they hope will be the financial foundation from which they will send their children to college and retire comfortably. The Sachdeva’s suffer from:a

A. I and II 
B. I, III and IV 
C. III and IV 
D. I, II and III 

Question # 60

Fiscal termites are factors that threaten the integrity of tax systems, and most of which relate to the internationalization of tax. These are:  

A. I, II and III 
B. III and IV
 C. I, II and IV 
D. All of the above

Question # 61

Which one of the following statements is/are correct? 

A. (i) only 
B. (ii) only
 C. Both are wrong 
D. None of the above

Question # 62

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?

A. $15,00,000 from Fixed-Rate to Floating-Rate Payer 
B. $12,50,000 from Fixed-Rate to Floating-Rate Payer
 C. $14,50,000 from Floating Rate Payer to Fixed Rate Payer 
D. $10,50,000 from Floating Rate Payer to Fixed Rate Payer 

Question # 63

Consider these two investment strategies: Strategy ___ is the dominant strategy because __________. 

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 # 64

You know the following concerning a common stock:  If you want to earn 10 percent, should you buy this stock? What is the maximum price you should be willing to pay for the stock?

A. Should Buy, Maximum price Rs. 30 
B. Should not buy, Maximum price Rs. 19.88 
C. Should buy Maximum Price Rs. Rs. 60.27 
D. Should not buy, Maximum price Rs. 22.66 

Question # 65

Management has recently announced that expected dividends for the next three years will be as follows: For the subsequent years, management expects the dividend to grow at 5% annually. If the risk-free rate is 4.30%, the return on the market is 10.30% and the firm’s beta is 1.40. What is the maximum price that you should pay for this stock? 

A. Rs. 167.25 
B. Rs. 41.38 
C. Rs. 165.45
 D. Rs. 168.86

Question # 66

Which of the following Biases are exhibited by Independent Individualist? 

A. I and II 
B. III and IV 
C. I and III 
D. All of the Above 

Question # 67

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?  

A. 2.10% 
B. 2.40% 
C. 4.50% 
D. 5.30% 

Question # 68

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: 

A. Rs 21, 33,684.21 
B. Rs 21, 12,254.24 
C. Rs 19, 75,452.15 
D. Rs 19, 84,578.29 

Question # 69

Which of the following portfolios falls below the Markowitz Efficient Frontier? 

A. Portfolio A 
B. Portfolio B 
C. Portfolio C 
D. Portfolio D 

Question # 70

Which of the following statements is/ are correct? 

A. I, II and III 
B. III and IV 
C. II and IV 
D. All of the above

Question # 71

Which one of the above statements is/are not a important needs of clients in the context of relationship management?

A. I 
B. II 
C. IV 
D. None of the above

Question # 72

Which of the following statements is/are False? 

A. Only (i) 
B. Only (ii) 
C. Both 
D. None of the above 

Question # 73

Which of the following statements are true? 

A. Only I 
B. Only II 
C. Both of the above 
D. Neither of the above 

Question # 74

Which of the following is closest to the forward price of a share price if  Dividend expected is 6%? 

A. Rs. 795 
B. Rs. 705 
C. Rs. 845 
D. None of these

Question # 75

The probability distribution of the rate of return on ABC stock is given below:  What is the standard deviation of return? 

A. 11.40% 
B. 12.90% 
C. 10.50% 
D. 13.50% 

Question # 76

Read the senario and answer to the question. During identification of new business opportunities, one of Harish’s friends Shekhar has offered him a business proposal. In this proposal a partnership firm consisting of two partners, Harish and Shekhar, shall take the franchise of a company which is a reputed brand in the field of pathology lab in which their investment and profit sharing ratio shall be equal. Franchise rights shall be valid for 5 years and the project requires an upfront investment of Rs. 25 lakh for required infrastructure. The franchisee agreement has an option that the company can take over the franchisee after 5 years by charging depreciation @15% p.a. on straight line basis. The projected profits from the firm are as follows: Harish wants to know what IRR he will earn on his investment from this project ? (Please ignore taxes and assuming no additional investment is made during this five year period)

A. 8.20% 
B. 5.17% 
C. 12.27%
 D. 7.82%

Question # 77

Which of the following statement is/are true? 

A. Statement (I) Only 
B. Statement (I) and (II) both 
C. Statement (II) Only 
D. None of the Statement 

Question # 78

When deciding under uncertainty, which of the following generally accepted guidelines that a decision maker should follow: 

A. III and IV 
B. II and V
 C. I and III
 D. None of the Above 

Question # 79

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?

A. 20% 
B. 53%
 C. 40% 
D. 46% 

Question # 80

Which of the following statements is / are correct? 

A. I, II and III 
B. I,III and IV 
C. II, III and IV 
D. All of the above

Question # 81

Data for five comparable income properties that sold recently are shown below:  What is the indicated overall rate (RO)? 

A. 9.54 
B. 10.05 
C. 11.5 
D. 12.25 

Question # 82

From the following data in respect to the property price, calculate the value of the property for your client Mr. Nitin Sharma, as per the capitalization rate. 

A. Rs. 7,50,000 
B. Rs. 7,70,000 
C. Rs. 7,07,500 
D. Rs. 7,04,545 

Question # 83

Which of the following statements is/are correct? 

A. I and II 
B. I and III 
C. III and IV
 D. I, II and III 

Question # 84

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

A. I, III, IV and V 
B. II, III, IV and V
 C. I, II and III 
D. All of the above 

Question # 85

Calculate expected rate of return on the following portfolio.  Weight of X and Y in the portfolio is 50% and 50% respectively. 

A. 19.25% 
B. 15.35%
 C. 16.40% 
D. 17.85% 

Question # 86

Calculate the Information Ratio from the following data: 

A. 0.41 
B. 0.67
 C. 0.76 
D. 0.38

Question # 87

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? 

A. I and II 
B. I and IV
 C. Only III 
D. All of the above

Question # 88

An investor is considering the purchase of a small office building and, as part of his analysis, form the following given data calculate the appraised value of the property using the Income Approach.

A. Rs. 21,00,000
 B. Rs. 19,75,000 
C. Rs. 19,50,000 
D. Rs. 18,37,500

Question # 89

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? 

A. I and II 
B. I and III 
C. III and IV 
D. I, II and III 

Question # 90

Which one of the above statements is/are correct? 

A. (i) only 
B. (ii) only 
C. Both are correct 
D. Both are incorrect 

Question # 91

The term “permanent establishment” includes especially: 

A. I, II and III 
B. II and III 
C. III and IV
 D. All of the Above

Question # 92

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?

A. $15,50,000 from Fixed-Rate to Floating-Rate Payer 
B. $12,75,000 from Fixed-Rate to Floating-Rate Payer 
C. $11,25,000 from Fixed-Rate to Floating-Rate Payer 
D. $9,75,000 from Floating Rate Payer to Fixed Rate Payer 

Question # 93

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?

A. 17%, 15.4% 
B. 15.4%, 14% 
C. 13%, 12% 
D. 11%, 10% 

Question # 94

OMG Petro Ltd produces and markets crude oil. The following are selected numbers from the financial statements for 1992 and 1993 (in millions). The firm had capital expenditures of Rs950 million in 1992 and Rs1 billion in 1993. The working capital in 1991 was Rs190 million, and the total debt outstanding in 1991 was Rs5.75 billion. There were 305 million shares outstanding, trading at Rs21 per share. Estimate the cash flows to equity in 1992 and 1993(in Rs Millions)

A. 133 and (300) 
B. 725 and 285 
C. 350 and 185
 D. 202 and 301 

Question # 95

Which of the following investment options would most likely be part of the portfolio of a Moderate investor? 

A. I, III, IV and V
 B. II, IV and V
 C. I, III and IV 
D. II, III and IV 

Question # 96

Which of the following two outcomes is an example of Loss Aversion Bias: 

A. I 
B. II 
C. Both of the above 
D. None of the above

Question # 97

Which of the following statement is/are true? 

A. Statement I Only. 
B. Statement II Only.
 C. Statement I and II both 
D. None of the statement 

Question # 98

Which of the following statements is / are correct? 

A. Only I and II 
B. II, III and IV 
C. I, II and III
 D. All of the above

Question # 99

Mahesh wants to sell a property for Rs. 30 lakhs. He is earning rent from tenant Rs. 3,60,000. He is spending following amounts annually on that property.  Based on the above information what should be the value of the property would be: 

A. 32,25,714.29 
B. 31,94,570.43 
C. 35,91,765.19 
D. 41,53,210.21

Question # 100

Which of the following statements are correct?  

A. I and II 
B. I and III 
C. III and IV
 D. All of the Above

Question # 101

You are given the following set of data: Historical Rate of Return Determine the arithmetic average rates of return and standard deviation of returns of the NSE over the period given. 

A. 14.25%, 23.75% 
B. 12.10%, 22.62% 
C. 15.63%, 27.63% 
D. 16.74%, 29.74% 

Question # 102

Equifax Credit Report Contain 

A. I, III and V 
B. II, IV and V 
C. I, III and IV 
D. All of the Above 

Question # 103

You may need to file your Returns in India under the following circumstances: 

A. I, II and III 
B. II and III
 C. III and IV
 D. All of the above

Question # 104

Which of the above statements is/are correct? 

A. (i) only 
B. (ii) only 
C. (i) and (ii) both are correct 
D. Both are incorrect

Question # 105

Which of the following statements is/are true? 

A. I, II and III
 B. I, II and IV 
C. I, III and IV 
D. II, III and IV 

Question # 106

Calculate the value at which an office building can be priced from the following information:  A similar building has 8% capitalization rates. 

A. Rs. 23,95,500 
B. Rs. 23,00,000
 C. Rs. 24,13,500
 D. Rs. 22,12,000

Question # 107

The expected return and standard deviations of stock A & B are:  Amit buys Rs.20,000 of Stock A and sells short Rs.10,000 of Stock B using all the Proceeds to buy more or Stock A. The correlation Between the two securities is .35. What are the expected return & standard deviation of Amit’s portfolio? 

A. 3.5%, 15.5% 
B. 8.8%, 7.03% 
C. 20%, 14.5% 
D. 9.8%, 15.6% 

Question # 108

The following were P/E ratios for some Asian markets in February 1994, with relevant information on interest rates and economic growth: Assuming the dividend payout ratio in each of these countries is 60%, estimate the P/E ratio in South Korea and Thailand, based upon stable growth. (Use a risk premium of 7.5% over the risk-free rate in each country.)  

A. Rs 20.18 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 # 109

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

A. I 
B. II 
C. Both of the above 
D. None of the above 

Question # 110

The breakdown of commodity future returns over the past 30 days for 2 upcoming oil future contracts is given below: What is the roll return for the period 15th September to 15th October for the contracts maturing in November and February?

A. $0.25 and $0.10
 B. $0.20 and $0.15
 C. $0.15 and $0.25
D. $0.10 and $0.10 

Question # 111

The Dow theory illustrates that the three forces that simultaneously affect stock prices are ____________.

A. I, II, and III
 B. II, III, and IV 
C. III, IV and V 
D. I, II, and IV

Question # 112

Which of the following are the advantages of a Credit Union: 

A. I, III and V 
B. II, IV and V 
C. I, III and IV 
D. All of the Above

Question # 113

In a wealth management Platform which of the following is/are the functions of Middle/Back Office – Advisor 

A. I, II and III 
B. II and III 
C. I, II and IV 
D. All of the Above 

Question # 114

Which one of the following statements is/are correct? 

A. (i) only 
B. (ii) only 
C. Both are correct 
D. Both are incorrect

Question # 115

Suppose that an investor makes an investment in Stock ABC and that over the next 12 months ABC appreciates by 10 percent. He then thinks of selling ABC for normal portfolio rebalancing purposes, but then come across an item in the, The Economic Times that sparks new optimism: Could ABC climb even higher? Which answer describes the likeliest response from an investor with regard to exhibiting Regret Aversion Bias, given ABC’s recent performance and this new information? 

A. I and II 
B. I or II 
C. II and III 
D. All of the Above

Question # 116

Read the senario and answer to the question. Which of the following would affect Net Worth of Keshav?

A. 2 and 3 
B. 3 and 4 
C. 1, 3 and 4 
D. 1, 2 and 4 

Question # 117

Which of the following statements is/are correct? 

A. I and II 
B. I, II and III 
C. III and IV 
D. All of the Above 

Question # 118

Which of the following Biases are exhibited by Active Accumulator?

A. I, II and III 
B. III and IV 
C. I and III 
D. All of the Above 

Question # 119

If the commodity’s futures price declines 

A. I and III 
B. I and IV 
C. II and III 
D. II and IV 

Question # 120

An employee joined in the year 2000 in a sugar mill. After working all the years as a seasonal employee up to the year 2011. He retires with the following monthly salary How much gratuity is payable to him? 

A. Rs 11308 
B. Rs 9692 
C. Rs 8885 
D. Rs 20769

Question # 121

Mahesh wants to sell a property for Rs. 30 lakhs. He is earning rent from tenant Rs. 3,60,000. He is spending following amounts annually on that property Based on the above information what should be the value of the property would be: 

A. 3225714.29 
B. 3194570.43 
C. 3591765.19 
D. 4153210.21 

Question # 122

Tapley Dental Supply Company has the following data:  If Tapley could streamline operations, cut operating costs, and raise net income to Rs300, without affecting sales or the balance sheet (the additional profits will be paid out as dividends), by how much would its ROE increase?

A. 3.00% 
B. 3.50% 
C. 4.00% 
D. 4.25% 

Question # 123

To maximize this benefit a bank must:  

A. I, II and III 
B. I, III and IV 
C. II, III and IV 
D. All of the above

Question # 124

The required rate of return on an investment is 12%, you estimate that a firm X’s dividend will grow as follows: For the subsequent years you expect the dividend to grow at the more modest rate of 7% annually. What is the maximum price that you should pay for this stock?

A. Rs. 67.25 
B. Rs. 67.83 
C. Rs. 65.45 
D. Rs. 68.86

Question # 125

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

A. I, II and III 
B. I, III and IV 
C. I, II and IV 
D. All of the above 

Question # 126

You are required to calculate standard deviation of the following portfolio  CovAB = 220. 

A. 52.00% 
B. 51.25% 
C. 55.25% 
D. 16.32% 

Question # 127

You own 3 scripts with their market value at  Calculate the CAGR of portfolio. 

A. 5% 
B. 10.26% 
C. 1.64% 
D. 11.16% 

Question # 128

What are the two strategies that have the broadest mandate across financial, commodity, and futures markets? 

A. I & V 
B. II & IV 
C. IV & V 
D. I & III

Question # 129

Risk to bondholders comes from  

A. I and II 
B. I and III 
C. II and III 
D. All of the above 

Question # 130

In a wealth management Platform which of the following is/are the functions of Middle/Back Office – Advisor?

A. I, II and III 
B. II and III
 C. I, II and IV 
D. All of the Above 

Question # 131

Which of the following statements is/are correct with respect to Resident Very Senior Citizen i.e. who is of an age of 80 years and above?  

A. I and II 
B. I and III 
C. Only III
 D. All of the above 

Question # 132

From the following data calculate the covariance between stock A and stock B 

A. 65 
B. 60 
C. 54 
D. 76 

Question # 133

Which of the following statement is/are correct? 

A. (i) only 
B. (ii) only 
C. Both are correct 
D. Both are incorrect

Question # 134

Which of the following statements is/are correct? 

A. I and II 
B. II and III 
C. I and III 
D. All of the Above 

Question # 135

____________ are good examples of the limits to arbitrage because they show that the law of one price is violated.

A. II, III and IV 
B. I, III, and IV
 C. I, III, and V 
D. II, IV and V 

Question # 136

The factors contributing to a Credit Score are : 

A. I, III and IV 
B. II and IV 
C. I and III 
D. All of the Above 

Question # 137

A portfolio consists of 3 securities.  What is the standard deviation of the portfolio? 

A. 2.5 
B. 3.5 
C. 7.7 
D. 6.9

Question # 138

Read the senario and answer to the question. Assume the following additional facts: The Shankers have purchased a homeowner’s policy (comprehensive) covering 100% of the replacement cost of their residence. This policy has a Rs. 500 deductible. Also, they have purchased a disability income policy with a 30-day elimination period and an anyoccupation definition of disability. What actions should the Shankers consider in order to improve the quality of the insurance program described above?

A. (I) only 
B. (I) and (IV) only 
C. (I) and (III) only 
D. (II) and (IV) only 

Question # 139

Which of the following is/are incorrect with respect to Draft guidelines of REITs in India? 

A. Only III 
B. III and IV 
C. Only II 
D. I and II 

Question # 140

Consider the following information for three mutual funds  Risk free return is 7%. Calculate Treynor measure? 

A. 4.55, 8.89, 5.83 
B. 3.25, 6.78, 4.65 
C. 4.35, 7.78, 4.35 
D. 3.75, 7.85, 5.78

Question # 141

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

A. I and II 
B. II and III 
C. I and III 
D. All of the Above 

Question # 142

Calculate the beta on a portfolio from the following data: 

A. 1.5 
B. 1.29 
C. 0.96 
D. 1.23 

Question # 143

Which of the following statement is correct w.r.t to the obligations of an Investment Advisor Registered under SEBI Investment Advisor Regulations 2013. 

A. I, II and III 
B. I, II, and IV
 C. I, II, III and IV
 D. II, III and IV 

Question # 144

Which of the following statements is / are correct? 

A. I, II and III 
B. I and III 
C. II and IV 
D. All of the above

Question # 145

The following parameters are available for four mutual funds:  Calculate Treynor’s performance index for each of the funds on the assumption that r=6% where r stands for the risk – free interest rate.

A. 6, 2.5, 1.43, 0 
B. 7, 2.5, 2.43, 4 
C. 5, 2.5, 1.43, 5
D. 6, 2.5, 1.43, 2 

Question # 146

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

A. I, III, IV and V 
B. II, III, IV and V
 C. I, II and III 
D. All of the above

Question # 147

Read the senario and answer to the question. Saxena is considering an attractive investment proposal in which he is being offered two different cash flow choices at the same initial investment of Rs. 2,00,000. According to you which one should he opt for assuming Risk Free Interest Rate is the required rate of return?

A. Plan A should be opted since it has a higher Future Value.
 B. Plan B should be opted since it has a lower Present Value. 
C. Plan B should be opted since it has a higher Present Value. 
D. Plan B should be opted since it has a lower Future Value.

Question # 148

Which of the following statements is/are correct? 

A. I, II and III 
B. III and IV 
C. I, II and IV 
D. All of the above 

Question # 149

A Portfolio manager is holding the following portfolio:  The risk free rate of return is 6% and the portfolio’s required rate of return is 12.5%. The manager would like to sell all of his holdings in stock A and use the proceeds to purchase more shares of stock D. What would be the portfolio’s required rate of return following this change?

A. 13.63% 
B. 10.29% 
C. 11.05%
 D. 12.52% 

Question # 150

Read the senario and answer to the question. Mrs. Deepika’s brother is impressed with Manav Fashion Ltd. an online clothing firm that focuses on the 18–22 age bracket. Their prices are much lower than their competitors, and the quality is high. Reading about the firm on its web site and in various financial newspapers, her brother has learned that the company plans to expand its clothing lines. The prevailing price of its share is 70 per share. Manav Fashion Ltd. has had recent annual earnings of Rs. 5 per share. Only three other companies have very similar business to Manav Fashion Ltd. and have stock that is traded and there PE ratios are as follows:  Her brother asked Mrs. Deepika to guide him in investing the Manav Fashion Ltd. Getting the query from her brother Mrs. Deepika asks your advice on this matter. As a Chartered Wealth Manager what will be your advice? 

A. Invest in shares of Manav Fashion Ltd. 
B. Not to invest in shares of Manav Fashion Ltd 
C. Manav Fashion Ltd’s share valuation is less than prevailing price, so it is an option not to miss. 
D. Manav Fashion Ltd’s share valuation is less than prevailing price, so it is an option not to be availed. 

Question # 151

Calculate the expected rate of return for M/S X Ltd. from the following information: 

A. 16.50% 
B. 15.50% 
C. 14.00% 
D. 16.50% 

Question # 152

Data on following mutual funds given below:  Risk free return is 8%. Calculate Treynor measure. 

A. 4.45, 6.98, 5.33 
B. 6.72, 6.26, 6.31 
C. 2.95, 8.16, 5.31 
D. 6.09, 10.53, 5.93 

Question # 153

A Portfolio manager is holding the following portfolio:  The risk free rate of return is 6% and the portfolio’s required rate of return is 12.5%. The manager would like to sell all of his holdings in stock A and use the proceeds to purchase more shares of stock D. What would be the portfolio’s required rate of return following this change?

A. 13.63% 
B. 10.29% 
C. 11.05% 
D. 12.52% 

Question # 154

Blair Company has Rs5 million in total assets. The company’s assets are financed with Rs1 million of debt, and Rs4 million of common equity. The company’s income statement is summarized below: The company wants to increase its assets by Rs1 million, and it plans to finance this increase by issuing Rs1 million in new debt. This action will double the company’s interest expense, but its operating income will remain at 20 percent of its total assets, and its average tax rate will remain at 40 percent. If the company takes this action, which of the following will occur? 

A. The company’s net income will increase. 
B. The company’s return on assets will fall. 
C. The company’s return on equity will remain the same. 
D. Statements a and b are correct. 

Question # 155

Division Z is a profit centre, which produces four products A, B, C and D, Each product is sold in the external market also. Date for the period is as follows: Product D can be transferred to division Y but the maximum quantity that might be required for transfer is 2,500 units of D. The maximum sales in the external market are: Division Y can purchase the same product at a slightly cheaper price of Rs. 125 per unit instead of receiving transfer of product D from division Z. What should be transfer price for each unit for 2500 units of D, if the total labour hours available in division Z is:

A. 117.25 
B. 118.34 
C. 132.26 
D. 145.12 

Question # 156

Vikash has following portfolio with related details given below:  Calculate the portfolio beta? 

A. 1.15 
B. 1.65 
C. 3.45 
D. 1.35 

Question # 157

Which of the following statements is/are correct? 

A. I and II 
B. I, II and IV 
C. III and IV 
D. All of the Above 

Question # 158

Which of the following are the objectives of National Housing Bank in Indian Real Estate Market?

A. I, II, III
 B. II, III, IV and V 
C. III, IV and V 
D. I, II and V 

Question # 159

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

A. I and II 
B. III and IV
C. I, II and IV 
D. I, II and III 

Question # 160

Suppose you have some money to invest and you hear about a great stock tip from your neighbor who is known to have a good stock market sense. He recommends you purchase shares in Petrolite, a company that makes a new kind of lighter fluid for charcoal grills. What is your response to this situation if you exhibit Availability bias?

A. I 
B. II 
C. Both of the above 
D. None of the above 

Question # 161

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

A. I, II and III 
B. I,III and IV 
C. I, II and IV 
D. All of Them

Question # 162

Read the senario and answer to the question. Raman is considering the purchase of a office building and, as part of his analysis, from the following given data calculate the appraised value of the property using the Income Approach?

A. Rs. 19,50,000 
B. Rs. 19,25,750 
C. Rs. 19,15,500
 D. Rs. 18,75,500 

Question # 163

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? 

A. 8%
 B. 12% 
C. 10% 
D. 9.50%

Question # 164

Phoenix Ltd has Rs 50,00,000 in total assets. The company’s assets are financed with Rs 10,00,000 of debt, and Rs 40,00,000 million of common equity. The company’s income statement is summarized below:  The company wants to increase its assets by Rs 10, 00,000, and it plans to finance this increase by issuing Rs 10, 00,000 in new debt. This action will double the company’s interest expense, but its operating income will remain at 20 percent of its total assets, and its average tax rate will remain at 40 percent. If the company takes this action, which of the following will occur: 

A. The company’s net income will increase. 
B. The company’s return on assets will fall. 
C. The company’s return on equity will remain the same. 
D. A and B will occur

Question # 165

Choose the amount of final tax liability of R for the assessment year 2007-08: 

A. 17100 
B. 17442 
C. 15700
 D. 16014

Question # 166

Read the senario and answer to the question. Vinay has come across two projects, each with a 12% required rate of return and under given cash flows:  If the projects are independent, you being a CWM® would advise Vinay to: 

A. Reject both projects 
B. Accept Project A and Reject Project B 
C. Reject Project A and Accept Project B
 D. Accept both projects 

Question # 167

As an investor you have a required rate of return of 14 percent for investments in risky stocks. You have to analyze three risky firms and must decide which (if any) to purchase. Your information is What is the maximum price? Which (if any) should buy? 

A. Rs. 23/-, Rs. 47/-, Rs.70/- , Share- C 
B. Rs. 15.29, Rs. 43.71, Rs. 63.64, No buy 
C. Rs. 15.29, Rs. 22.50, Rs. 49.50, Share B and C 
D. Rs. 16.36, Rs. 49.67, Rs. 69.75, Share B only 

Question # 168

Data on following mutual funds is given below:  Risk free return is 8%. Calculate Sharpe measure. 

A. 0.45, 0.98, 0.33 
B. 0.72, 0.26, 0.31 
C. 0.95, 0.16, 0.31
 D. 0.61, 1.05, 0.59 

Question # 169

You are given the following set of data on security ABC:  Calculate the expected return on security ABC? 

A. 0.12 
B. 0.15 
C. 0.13 
D. 0.14 

Question # 170

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

A. I and II 
B. III and IV 
C. I, II and IV 
D. I, II and III

Question # 171

Calculate the treynor measure, Sharpe measure and Jensen measure from the following data: The mean risk free rate was 6 percent. 

A. 5.45, 0.33, 0.5 
B. 0.33, 4.5, 2.5 
C. 0.23, 2.61, 3.2
 D. 4.2, 0.33, 0.40 

Question # 172

During the past five years, the returns of a stock were as follows:  Calculate the expected rate of return 

A. 6.80% 
B. 7.40% 
C. 8.50% 
D. 9.23% 

Question # 173

Which of the following statements is/are correct with respect to naïve diversification? 

A. Only I 
B. Only II 
C. Both of the above 
D. None of the Above 

Question # 174

During “Building the foundation” life stage, we learn about _______ 

A. Budgeting 
B. Five Fundamental of Fiscal Fitness 
C. Three Fundamental of Fiscal Fitness 
D. Seven Fundamental of Fiscal Fitness

Question # 175

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 fixedrate 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? 

A. Rs 3,30,000 
B. Rs 3,90,351
 C. Rs3,75,000 
D. Rs 3,57,000 

Question # 176

Calculate the NOI for an office building with the following information: 

A. Rs. 1,73,500 
B. Rs. 1, 91,000 
C. Rs. 1,93,500 
D. Rs. 2,11,000 

Question # 177

The following parameters are available for two mutual funds:  Calculate Treynor’s performance index for Fund A & Fund B respectively 

A. 8, 1.66 
B. 10, 3.33 
C. 9, 2.50 
D. 18, 4.25 

Question # 178

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

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 # 179

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)

A. 45 and (20.5)
 B. 43.60 and (21) 
C. 76 and 19.55 
D. 102 and 301 

Question # 180

Which of the following statements is / are correct? 

A. I, II and III 
B. I, III and IV 
C. II, III and IV 
D. All of the above 

Question # 181

Consider the following information for three mutual funds:  Market Return 10% Risk free return is 7%. Calculate Jensen measure (%).

A. 1.70, 5.30, 3.40 
B. 2.25, 3.78, 4.65 
C. 4.35, 3.78, 2.53 
D. 3.17, 4.58, 5.78

Question # 182

Manish is thinking of acquiring some shares of ABC. Ltd. The rate of returns is as follows:  Calculate the variance and the standard deviation 

A. 16, 8 
B. 8, 16 
C. 7.4, 54.3 
D. 35.04, 5.92 

Question # 183

Mr. Jatin is a single forty nine year-old pharmaceutical executive earningRs25,00,000 per year. He lives extravagantly, occasionally spending more than his income, but has saved approximately Rs. 15,00,000. His primary investment goal is to donate Rs30,00,000 to his alma mater, but cannot obtain life insurance. Mr. Jatin exhibits the following biases:

A. I and II 
B. I and III
 C. III and IV 
D. I, II and III 

Question # 184

The returns of 2 shares are as follows  Calculate the covariance of returns. 

A. 220.32 
B. –420.11 
C. 162.08 
D. 270.36

Question # 185

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%?

A. 8 years, Increase 
B. 7.33 years, Decrease 
C. 6.031 years, Increase 
D. 7.012 Years, Decrease

Question # 186

There are three stocks, A, B, and C. You can either invest in these stocks or short sell them. There are three possible states of nature for economic growth in the upcoming year; economic growth may be strong, moderate, or weak. The returns for the upcoming year on stocks A, B, and C for each of these states of nature are given below: If you invested in an equally weighted portfolio of stocks A and B, your portfolio return would be ___________ if economic growth were moderate.

A. 3.00% 
B. 14.50% 
C. 15.50% 
D. 16.00% 

Question # 187

Asset allocation policy 

A. I and II 
B. I and III 
C. II and III 
D. None of the above

Question # 188

Zoya Ltd has the following Balance sheet for FY 2005-2006:  The Total Sales for the year was Rs. 6,00,000. The company president believes the company carries excess inventory. Accordingly he wants the inventory turnover ratio to be 8x and would use the freed up cash to reduce current liabilities. If the company follows the president’s recommendation and sales remain the same, the new quick ratio would be:

A. 2.4 
B. 3 
C. 4.5
 D. 1.2 

Question # 189

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? 

A. 29.76 months 
B. 27.20 months 
C. 2.26 months 
D. 4.80 months 

Question # 190

Investments that are difficult to convert to cash are said to have _________ 

A. High Liquidity 
B. Low Liquidity 
C. High standard deviation 
D. Low standard deviation

Question # 191

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? 

A. Rs. 10.00 
B. Rs. 12.12
 C. Rs. 16.00 
D. Rs. 11.97 

Question # 192

Family Offices provide _____________ 

A. Specialist advice and planning 
B. Investment Management 
C. Administration 
D. All of the above 

Question # 193

__________ organization try to segment their customers based on what product the customer purchased.

A. Production-centered 
B. Product-centered 
C. Customer-centered 
D. Consumer-centered 

Question # 194

Liquid assets comprise 

A. Certificate of Deposits 
B. Money Market Mutual Funds 
C. Funds in savings account 
D. All of the above 

Question # 195

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

A. Savings account 
B. Certificate of deposit 
C. Treasury bill 
D. Treasury bond

Question # 196

Consider a one-year maturity call option and a one-year put option on the same stock, both with striking price Rs45. If the risk-free rate is 4%, the stock price is Rs48, and the put sells for Rs1.50, what should be the price of the call? 

A. Rs. 4.38
 B. Rs. 5.60 
C. Rs. 6.23 
D. Rs. 12.26

Question # 197

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

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 # 198

In a “Pure Play” model of wealth management 

A. Wealth Management is viewed as the core business of the firm 
B. Wealth Management and investment banking are the core business of the bank 
C. Focus is on wide array of products of which private banking is one 
D. None of the above 

Question # 199

A good example of closed-end credit is: 

A. A credit card issued by VISA or Master Card. 
B. The use of overdraft protection at a bank. 
C. The use of a cashier's check to pay for a purchase. 
D. A mortgage loan.

Question # 200

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

A. 9 
B. 10 
C. 11 
D. All of the above 

Question # 201

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 _____________. 

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 # 202

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.

A. Rs 41.45 
B. Rs 55.36
 C. Rs 50.20 
D. Rs 61.75

Question # 203

Long-term cash flow improvement may not be achieved by 

A. Increasing equity capital 
B. Reducing capital expenditure 
C. Increasing long-term liabilities 
D. Reducing long-term debt 

Question # 204

An aggressive asset allocation would contain larger proportions of __________ than a conservative allocation. 

A. Cash and bonds 
B. Bonds and large-cap stocks
 C. Small-cap and international stocks 
D. Bonds 

Question # 205

Babu Lal sold his residential house on 28-06-2010 and made a long term capital gain of Rs. 372229. He purchased a new house on 22-10-2010 for Rs. 360000 which is again sold for Rs.620000 on 16-6-2011. He purchased another house on 20-12-2011 for Rs.786000. Calculate the exemption available u/s 54 for the assessment year 2012-13. [CII-12-13: 852,11-12: 785,10-11:711]

A. Rs.786000 
B. Rs.360000
 C. Rs.372229
 D. Nil 

Question # 206

A rate of interest of 10% semi-annual compounded quarterly would be equal to ---------------- ---- % per annum compounded annually. 

A. 20% per Annum Compounded Annually 
B. 21.55% per Annum Compounded Annually 
C. 20.50% per Annum Compounded Annually 
D. 21% per Annum Compounded Annually 

Question # 207

Read the senario and answer to the question. Neeraj’s portfolio consist shares of company X Ltd. which is paying a dividend of Rs. 2 per share. The dividend is expected to grow @15% annual rate for 3 years, then @10% for the next 3 years, after which it is expected to grow @5% forever. What among the following would be your advice to Neeraj in case the market value of the share is Rs. 85? Assume capitalization rate to be 9% per annum

A. Keep the share as the market price is higher than the current value of the share. 
B. Sell the share as the market price is lower than the current value of the share 
C. Buy more shares as market price is lower than current value 
D. Sell the shares as the market price is higher than the current value of the shares

Question # 208

Under which of the following categories of General Warranty Deed does the buyer is guaranteed that the title will be good against third parties attempting to establish title to the property?

A. Covenant of seisin 
B. Covenant against encumbrances 
C. Covenant of quiet enjoyment 
D. Covenant of further assurance 

Question # 209

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. 

A. Rs. 1311.87 
B. Rs. 1156.18 
C. Rs. 13 509.39 
D. Rs. 1093.02

Question # 210

A bank recently loaned you Rs15,000 to buy a car. The loan is for five years (60 months) and is fully amortized. The nominal rate on the loan is 12 percent, and payments are made at the end of each month. What will be the remaining balance on the loan after you make the 30th payment?

A. Rs 8,611.17 
B. Rs 8,363.62 
C. Rs14,515.50 
D. Rs 8,637.38 

Question # 211

You buy a investment plan by investing Rs. 6000/- per month for first 12years and Rs. 11000/- per month for next 12 years. If the rate of interest is 15% per annum compounded monthly . How much amount would you have after 24 years? 

A. 18876542
 B. 2391612 
C. 18692506
 D. 18954240

Question # 212

Rule of 72 is used for 

A. Calculating the time in which an amount invested would double 
B. Calculating the time in which an amount invested would triple 
C. Calculating the time in which an amount invested would halve 
D. None of the above 

Question # 213

Major phases of budgeting process are: 

A. Assessing Current situation and recommendation of products
 B. Recommendation of products and Planning Financial direction 
C. Assessing current situation and planning financial direction 
D. None of the above 

Question # 214

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?  

A. 108.47%, 52.36% 
B. 106.44%, 66.7% 
C. 102.23%, 57.39% 
D. 95.26%, 47.27% 

Question # 215

Gold trades at Rs.16000 per 10 gms in the spot market. Three-month gold futures trade at Rs.16150. One unit of trading is 1kg and the delivery unit for the gold futures contract on the NCDEX is 1 kg. A speculator who expects gold prices to rise in the near future buys 1 unit of gold futures. Two months later gold futures trade at Rs.15900 per 10 gms. He makes a profit/loss of ______________.

A. (+)2500 
B. (+)25,000 
C. (-)2500 
D. (-)25,000

Question # 216

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

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 # 217

Real estate property consists of: 

A. Residential properties 
B. Commercial properties 
C. Speculative properties 
D. All of the above 

Question # 218

Incentive schemes, additional services and sentiments based scheme are called: 

A. Concentration on the paying ability of customers 
B. Building switching barriers 
C. Relationship based pricing schemes 
D. Differentiation in price and quality standards 

Question # 219

The subscription paid into PPF account enjoys the tax benefit under 

A. Sec 80D 
B. Sec 10 
C. Sec 80C 
D. Sec 80G 

Question # 220

investment plan pays Rs. 1 lac at the beginning of 10th year for 5 years and Rs. 2 lacs for next 5 years. If the rate of interest is 10% per annum. What will be the present value of this investment?

A. 362190 
B. 371298 
C. 383721 
D. 396454 

Question # 221

As a CWM you are required to calculate the tax liability of an individual whose taxable income is: • $321500 in SGD and he is a Singapore citizen • £ 35214p.a (only dividends) and he is a UK citizen

A. £ 6715.80 and 2843.50 SGD 
B. £ 13431.60 and 6906.25 SGD 
C. £ 26863.20 and 11375 SGD 
D. £ 11444.55 and 64300 SGD 

Question # 222

The income exemption threshold in respect of income year ending 30 June 2009 is as follows for an individual with two dependents in Mauritus is:

A. 410,000 
B. 3,50,000 
C. 2,85,000 
D. 3,95,000

Question # 223

_______________ and _______________ mandates are two kinds of service level contracts

A. Advisory, Discretionary 
B. Discretionary, Managed 
C. Advisory, Managed 
D. None of the above 

Question # 224

Pranoy is entitled to a basic salary of Rs. 5,000 p.m. and dearness allowance of Rs. 1,000 per month, 40% of which forms the part of the retirement benefits. He is also entitled to HRA of Rs. 2,000 p.m. He actually pays Rs. 2,000 p.m. as rent for a house in Delhi. Compute the taxable HRA.

A. Rs. 17,520 
B. Rs. 32,400 
C. Rs. 18,000 
D. Rs. 24,000 

Question # 225

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. 

A. TRUE 
B. FALSE

Question # 226

If the deceased has two widows, four sons and two daughters then what is the share of each widow

A. One seventh of estate 
B. One half of estate 
C. One eighth portion 
D. One fourteenth portion 

Question # 227

Commutation of pension up to a limit of _______________ is tax exempt in case the gratuity is also received. 

A. ¼ of the pension 
B. 1/3 of the pension 
C. ½ of the pension 
D. ¾ of the pension 

Question # 228

In regard to moving averages, it is considered to be a ____________ signal when market price breaks through the moving average from ____________.

A. Bullish: below 
B. Bearish; above 
C. Bullish above 
D. A and B

Question # 229

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.

A. Home Equity Loan 
B. Personal Loan 
C. Auto Loan
 D. Loan against Shares 

Question # 230

The use of P/E ratios to select stocks suggests that 

A. High P/E stocks should be purchased 
B. Low P/E ratio stocks are overvalued 
C. A stock should be purchased if it is selling near its historic low P/E 
D. A stock should be purchased if it is selling near its historic high P/E 

Question # 231

____________ is defined as a dollar per thousand dollars of assessed value of property and is used to calculate a property owner's tax bill.

A. Mill 
B. Tax Burden 
C. Assessed Value 
D. Progressive Tax 

Question # 232

Read the senario and answer to the question. Calculate the tax liability of Mr. Neeraj for the A.Y.08–09 assuming that he has avail full deduction under section 80C 

A. Rs. 496910 
B. Rs. 509500 
C. Rs. 525000 
D. Rs. 485000

Question # 233

________ bias means that investors are too slow in updating their beliefs in response to evidence. 

A. Framing 
B. Regret avoidance 
C. Overconfidence
 D. Conservatism 

Question # 234

Conventional theories presume that investors ____________ and behavioral finance presumes that they ____________. 

A. Are irrational; are irrational” 
B. Are rational; may not be rational”
 C. May not be rational; may not be rational 
D. May not be rational; are rational” 

Question # 235

___________ may be responsible for the prevalence of active versus passive investments management.

A. Forecasting errors 
B. Overconfidence 
C. Mental accounting 
D. Conservatism 

Question # 236

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.

A. 36987.34 
B. 37605.57 
C. 34598.98
 D. 44378.98 

Question # 237

The following is exempt income: 

A. Travel concession to employee 
B. Remuneration received for valuation of answer scripts 
C. Encashment of leave salary whilst in service 
D. Perquisites in India

Question # 238

An investor will take as large a position as possible when an equilibrium price relationship is violated. This is an example of _________. 

A. dominance argument 
B. mean-variance efficiency frontier 
C. risk-free arbitrage 
D. capital asset pricing model 

Question # 239

Forecasting errors are potentially important because 

A. Research suggests that people underweight recent information. 
B. Research suggests that people overweight recent information. 
C. Research suggests that people correctly weight recent information. 
D. Either A or B depending on whether the information was good or bad.

Question # 240

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. 

A. 15.4 
B. 10.2
 C. 7.4 
D. 6.7 

Question # 241

Deduction under section 80C to 80U is allowed from: 

A. gross total income 
B. gross total income exclusive of long-term capital gain 
C. gross total income exclusive of long-term capital gain as well as short-term capital gain 
D. gross total income exclusive of long-term capital gain from any asset and short-term capital from the transfer of shares and units through a recognized stock exchange 

Question # 242

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

 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 # 243

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.

A. 220034 
B. 230972 
C. 210034 
D. 200021 

Question # 244

A forward contract differs from a futures contract in that: 

A. A forward contract is for a shorter period of time. 
B. A forward contract does not specify the selling price. 
C. A forward contract does specify the selling price. 
D. A forward contract is non-binding. 

Question # 245

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?

A. Gambler's fallacy 
B. Law of small numbers 
C. Recency bias
D. Self-attribution bias 

Question # 246

Which of the following is NOT the general purpose of CRM? 

A. Purpose of CRM is better managing their customers through the introduction of reliable systems and methods. 
B. Purpose of CRM is enable organizations to service their existing customers more emphatically and more forcefully 
C. Purpose of CRM is not developing processes and procedures for interacting new customers. 
D. All of above given options 

Question # 247

In the maturity stage of the industry life cycle 

A. The product has reached full potential. 
B. Profit margins are narrower. 
C. Producers are forced to compete on price to a greater extent. 
D. A, B, and C. 

Question # 248

In a life insurance contract, offer refers to 

A. Proposer paying the first premium 
B. Proposer’s application form for insurance 
C. Original policy bond 
D. Company brochure duly authenticated 

Question # 249

Ratio of loading charge over the gross rate is called _________ 

A. Management fee 
B. Expense ratio 
C. Sharpe Ratio 
D. Mortality ratio 

Question # 250

Rate of 15% p.a compounded annually will be equal to ---------------- % per month. 

A. 1.25% per month 
B. 1.7149% per month 
C. 1.17149% per month 
D. 1.117% per month 

Question # 251

Which of the following statements about Real Estate Investment Trusts is/are true? 

A. REITs invest in real estate or loans secured by real estate. 
B. REITs raise capital by borrowing from banks and issuing mortgages. 
C. REITs are similar to open-end funds, with shares redeemable at NAV. 
D. Both A and B are true. 

Question # 252

As a CWM® you recommended Mr. Raj Malhotra to put his money in Asset A offering 15% annual return with a standard deviation of 10%, and balance funds in asset B offering a 9% annual return with a standard deviation of 8%. Assume the coefficient of correlation between the returns on assets A and B is 0.50. Calculate the expected return after 1 year and standard deviation of Mr. Raj Malhotra’s portfolio. 

A. 12.60% and 0.809% 
B. 11.67% and 8.75% 
C. 12.60% and 8.09% 
D. 8.09% and 12.60%