Exact2Pass
Section A (1 Mark)
________ bias means that investors are too slow in updating their beliefs in response to evidence.
Section B (2 Mark)
The minimum service required for entitlement to payment of gratuity under the Act, in case of an employee leaving service by death or incapacitation is
Section C (4 Mark)
Read the senario and answer to the question.
Which types(s) of investment(s), would be consistent with their retirement goal?
Section C (4 Mark)
Suppose Nifty is at 4500 in May. An investor, Mr. A, executes a Long Strangle by buying a Rs. 4300 Nifty Put for a premium of Rs. 23 and a Rs 4700 Nifty Call for Rs 43.
What would be the Net Payoff of the Strategy?
• If Nifty closes at 4232
• If Nifty closes at 5241
Section B (2 Mark)
Last year, Owen Technologies reported negative net cash flow and negative free cash flow. However, its cash on the balance sheet increased. Which of the following could explain these changes in its cash position?
Section B (2 Mark)
Total income of an individual including long-term capital gain of Rs. 50,000/- is Rs.1,60,000/-, the tax on total income for the assessment year 2012-13 shall be: CII-12-13: 852,11-12: 785,10-11:711]
Section A (1 Mark)
Select the CORRECT statement regarding basis risk associated with futures.
Section B (2 Mark)
If an investor strongly believes that the stock market is going to have a sharp decline shortly, he or she could maximize profit by
Section B (2 Mark)
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?
Section B (2 Mark)
If JVM Industries pays dividend of Rs.6 per share which is growing at a 8 percent rate per year and is expected to grow at the same rate in future. Its required rate of return is 16%. Determine its share price.
Section A (1 Mark)
The basic competitive factors facing industries include all of the following except:
Section B (2 Mark)
A bank has a long term relationship with a particular business customer. However, recently the bank has become concerned because of a potential deterioration in the customer's income. In addition, regulators have expressed concerns about the bank's capital position. The business customer has asked for a renewal of its Rs25 million dollar loan with the bank. Which credit derivative can help this situation?
Section C (4 Mark)
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?
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)
An activity is presumed to be a profit-making activity rather than a hobby if the
Section B (2 Mark)
A stock with a Beta of 0.7 currently priced at Rs 50 is expected to increase in price to Rs 55 by year end and pay Rs 1 as dividend. The expected market return is 15% and the risk free rate is 8%. The stock is:
Section B (2 Mark)
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?
Section C (4 Mark)
You own 3 scripts with their market value at
Calculate the CAGR of portfolio.
Section A (1 Mark)
The most profitable credit card customers for a bank are those that:
Section B (2 Mark)
Which of the following statements is/are correct with respect for Resident Senior Citizen i.e. who is of an age of 60 years and above, but below 80 years?
Section A (1 Mark)
Which of the following is not normally one of the reasons for a change in an investor's circumstances?
Section A (1 Mark)
________ refers to the activity of the real estate market as it reacts to the force of supply and demand.
Section B (2 Mark)
Consider these two investment strategies:
Strategy ___ is the dominant strategy because __________.
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 B (2 Mark)
How much loan can be given from PPF account in the year 2006-07?
Section B (2 Mark)
X Ltd. has given a dividend of Rs. 3 per share last year. The company is growing at a constant rate of 5 % every year and the investor’s required rate at this share is 12 % per annum. Find out the Intrinsic value of this share.
Section C (4 Mark)
Mr. Vinay, aged 36 years is working in a company, at a managerial level, and has an income of Rs. 40,000 p.m. comprising of Basic salary and DA as on 31/03/2008. His other allowances amount to Rs. 18,000 p.m. He would retire at the age of 60 years. His wife Reena, aged 32 years, is working in a High School and has a post-tax income of Rs. 2,76,000 per annum. Mr. and Mrs. Vinay have two daughter Deepika, aged 10 years and Rekha, aged 5 years.
Mr. Vinay’s father died of heart attack, 5 months back, at the age of 72 years, leaving a house (Value as on date Rs. 30 lakh) in which Vinay is staying at present and other assets worth Rs. 20 lakh (shares of large cap companies worth Rs. 10 lakh, Fixed deposit in post office of Rs. 5 lakh and Bank FD of Rs. 5 lakh) in Vinay’s mother’s name. His mother 63 years old is disabled and fully dependent on Vinay, he being the only child of his parents. Vinay has to keep an attendant for his mother, round the clock.
The Assets of the Couple are:
1.Cash in HandRs. 18,000
2.Bank balanceRs. 40,000 (Vinay) Rs. 25,000 (Reena)
3.JewelleryRs. 400000 (Reena)
4.Money Market Mutual FundRs. 3,00,000 (Vinay)
5.Shares
?ICICI Bank 200 shares bought at Rs. 1000 per share,
?Infosys 150 shares bought at Rs. 1700 per share
?Reliance Communication 350 shares bought at Rs. 350 share.
6.Debt oriented mutual FundsRs. 2,00,000
7.PPFRs. 5,00,000 (Vinay), Rs. 4,00,000 (Reena)
8.House in the joint name of Vinay and Reena with 50% ownership of each. This house has two floors and is let out for Rs. 9,000 pm for each of the floors. Present value of this house is Rs. 60,00,000.
Vinay and Reena had taken a housing loan of Rs. 15,00,000 each. Of this Rs. 10,00,000 is pending on each name. They are presently paying an EMI of Rs. 20,000 each, Rate of interest being 10.75% p.a.
The Retirement Benefits of Vinay after 15 years hence, are expected to be as follows:
Vinay has taken a term insurance of Rs. 30 lakh for 20 years, which is expiring 5 years from now. He has no other insurance. Vinay’s monthly household/ living expenses are Rs. 50,000. This excludes EMI on loans but includes all other expenses including expenses on his mother’s care.
Vinay expects Deepika to get married 12 years hence for which likely expenditures in today’s term is 15 lakh.
Vinay’s salary is likely to grow at 7% pa and Reena’s salary is likely to grow at 6% p.a. Risk free rate of interest is 8% pa and inflation is 6% p.a. Long term growth on Equity/Equity based MF is taken as 15% p.a.
Section B (2 Mark)
In order to determine the residential status of an NRI returning to India for permanent settlement, for the year of return, besides the stay not exceeding 181 days an additional condition is applicable that of stay not totalling to____________ days or more in relevant year if his stay in earlier ___________ years totaled to 365 days or more.
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 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 B (2 Mark)
Which of the following statements with respect to DTAA is/are correct?
Section A (1 Mark)
Which type of portfolio allocation is usually done once every few years?
Section C (4 Mark)
Pinnacle India Ltd, reported a net profit of Rs1.085 billion on sales of Rs7.425 billion in 1993. The sales/book value ratio in 1993 was approximately 1.2, and the dividend payout ratio was 20%. The book value per share was Rs19 in 1993. The firm is expected to maintain high growth for ten years, after which the growth is expected to drop to 6%, and the dividend payout ratio is expected to increase to 65%. The beta of the stock is 1.05. (The treasury bill rate is 7%.)
Estimate the price/sales ratio for the company.
Section A (1 Mark)
Company J and Company K each recently reported the same earnings per share (EPS). Company J’s stock, however, trades at a higher price. Which of the following statements is most correct?
Section C (4 Mark)
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?
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 CDO structures which are used by asset management companies, insurance companies and other investment shops with the intent of exploiting a mismatch between the yield of underlying securities and lower cost of servicing the CDO structures are called___________.
Section C (4 Mark)
Pacific Asia reported net income of Rs770 million in 1993, after interest expenses of Rs320 million. (The corporate tax rate was 36%.) It reported depreciation of Rs960 million in that year, and capital spending was Rs1.2 billion. The firm also had Rs4 billion in debt outstanding on the books, rated AA (carrying a yield to maturity of 8%), trading at par (up from Rs3.8 billion at the end of 1992). The beta of the stock is 1.05, and there were 200 million shares outstanding (trading at Rs60 per share), with a book value of Rs5 billion. Pacific Asia paid 40% of its earnings as dividends and working capital requirements are negligible. (The Risk Free rate is 7%.)
Estimate the free cash flow to the firm in 1993.
Section C (4 Mark)
United Healthcare, a health maintenance organization, is expected to have high earning growth for the next five years and 6% after that. The dividend payout ratio will be only 10% during the high growth phase, but will increase to 60% in steady state. The return on equity was 21% in the most recent time period and is expected to stay at that level for the next 5 years. The stock has a beta of 1.65 currently, but the beta is expected to drop to 1.10 in steady state. (The treasury bill rate is 7.25%.)
Estimate the price/book value ratio for United Healthcare, given the inputs above.
Section B (2 Mark)
The current market price of a share of CAT stock is Rs76. If a call option on this stock has a strike price of Rs76, the call
Section C (4 Mark)
Read the senario and answer to the question.
Assume Reena retires at the age of 60 years and invests her salary at 8% p.a.What will be the future value of Reena’s salary at the time of her retirement if she saves her entire salary?
Section A (1 Mark)
A firm in an industry that is very sensitive to the business cycle will likely have a stock beta ___________.
Section A (1 Mark)
The _______ is typically taken to be the risk-free rate.
Section A (1 Mark)
Financial goals must be SMART. SMART stands for _________________
Section B (2 Mark)
Which one of the above statements is/are not a important needs of clients in the context of relationship management?
Section C (4 Mark)
Personal Data
Financial Data
Shanker and Parvati Pandey have the following assets at fair market value (FMV):
Their simplified income statement is presented as follows:
They have no liabilities and no company-sponsored retirement plans.
They have no wills and they live in a non-community property state.
Shankers’ parents can meet all current expenses from current cash flow but have very limited reserve funds
Other Relevant Data
●They are inexperienced investors, but they are willing to take reasonable and normal investment risk if appropriate, but they do not wish to invest aggressively.
●Both Shanker and Parvati have purchased term life insurance policies with Rs. 250,000 death benefit on each; they own their own policies, and Ganesh is the contingent beneficiary on both policies.
●Shanker is the primary beneficiary of Parvati’s single premium deferred annuity; Ganesh is the contingent beneficiary.
●You have found their disability insurance inadequate. The Pandey have indicated they could fit your proposed Rs. 3500 annual premium for an adequate policy into their living expenses.
●You have reviewed their auto, homeowner’s, liability, and life insurance and found their policies adequate. Shanker and Parvati are responsible for their medical expenses.
●Ganesh is an intelligent high school student who earns scholarship of Rs. 2,000 annually and has a Rs. 500 in savings account.
●The “cash” is invested in a variety of money market funds and insured savings accounts.
●They do not plan additional children and they have no other dependents.
●The Pandey currently can save Rs. 5,000 per year out of current salary and can continue to do so (in inflation-adjusted Rupees) until they retire in 20 years. This savings rate assumes that all planned asset acquisition and replacements are paid out of income before savings (except the three goals as per below.
Goals (in order of priority)
1.College education for Ganesh. They expect to spend a total of Rs. 5,00,000 (Present value) for his entire education.
2.Retirement in 20 years which maximizes their standard of living at retirement.
3.Parvati and Shanker plan to take 6 months off from work (“sabbatical”) in 4 years for travel and research and to spend Rs. 1,50,000.
Economic Environment
The economy has been in a period of modest economic growth for about 2 years. Inflation, as measured by the CPI, was at a 4.9% annual rate over the last year. Ninety-day T-bill rates are currently 6%, while the yield to maturity on 20-year government bonds is 7.5%. Most forecasts call for little change in these conditions over the short and long term.
Assumptions provided by Wealth Manager
Section A (1 Mark)
If a female dies without leaving any issue them property inherited from her father or mother the property will devolve upon
Section A (1 Mark)
Which of the following is the process of enabling personnel to deliver service in manner that is beneficial to both the organization’s customers and to itself?
Section B (2 Mark)
A bank is concerned about excess volatility in its cash flows from some recent business loans it has made. Many of these loans have a fixed rate of interest and the bank's economics department has forecast a sharp increase in interest rates. The bank wants more stable cash flows. Which type of credit derivative contract would you most recommend for this situation?
Section B (2 Mark)
As Per Article 12 Double Taxation Avoidance Agreement with US, _____per cent of the gross amount of the royalties or fees for included services as defined in this Article, where the payer of the royalties or fees is the Government of that Contracting State, a political sub-division or a public sector company.
Section C (4 Mark)
Mr. Rajesh constructs a Long Straddle Strategy with one Nifty Call Option having a Strike price of Rs. 4500 available at a premium of Rs. 122 and one Nifty Put Option with a strike price Rs. 4500 at a premium of Rs. 85
What would be the Net Payoff of the Strategy?
• If Nifty closes at 4234
• If Nifty closes at 4766
Section C (4 Mark)
Read the senario and answer to the question.
If Saxena’s debentures have a balance maturity period of 15 years &the coupons are payable annually, what should be the market valuation of these debentures, if risk free interest rate is taken as the required IRR?
Section A (1 Mark)
You buy a investment plan by investing Rs. 5000/- per month for first 12years what is the maximum amount you can withdraw from this account for 12 years every month if you want to have Rs. 500000 at the end of 24 years .The rate of interest is 15% per annum compounded monthly.
Section A (1 Mark)
Mr. Murli is 55 years old at present. He has invested some amount in an annuity which will pay him begining of the 5th year Rs. 30,000/- p.a. at the beginning of every year for 10 years. Rate of interest is 7% p.a. Calculate how much amount he has invested now?
Section B (2 Mark)
As per article 12 Double Taxation Avoidance Agreement with Singapore, Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise and according to the laws of that Contracting State, but if the recipient is the beneficial owner of the royalties or fees for technical services, the tax so charged shall not exceed__________ per cent.
Section C (4 Mark)
Arvind Ltd. currently EPS is Rs.5. Its return on equity (ROE) is 25% and it retains 60% of its earning. Stocks of similar risk are priced to return 18%. What is the intrinsic value of Arvind Ltd’s Stock?
Section B (2 Mark)
Withholding Tax Rates for payments made to Non-Residents are determined by the Finance Act passed by the Parliament for various years. The current rates for Royalities are:
Section A (1 Mark)
In whose total income, the income of a minor child is included –
Section A (1 Mark)
Short-term capital gain arising for the transfer of equity shares and units of equity oriented fund shall be taxable
Section A (1 Mark)
The________________ deals with the double-edged enigma of why individuals like dividends (in developed country where dividends are taxable) and why this method of income distribution persists in light of quite burdensome double taxation.
Section B (2 Mark)
Which of the following is an assumption of two stage dividend discount model?
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)
Deduction under section 80QQB is allowed to an author of a book of literary or artistic or scientific nature who is resident in India to the extent of:
Section A (1 Mark)
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?
Section A (1 Mark)
Guarantees covering security deposit/earnest money/advance payment/ mobilization advance etc. would come under__________________ category
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)
Read the senario and answer to the question.
Harish wants to go abroad on a family vacation tour in January next year. A tour operator is offering him a package in which he has to pay only Rs. 20,000 on 1st January, 2011 which is 10% upfront amount, while the remaining amount is to be repaid in 36 EMIs of Rs. 7,500 each, first EMI payable on 1st February, 2011. Harish wants to know the annual effective rate of interest which he may incur in subscribing to this offer.
Section B (2 Mark)
Any income chargeable under the based “Salaries” is exempt from tax under Section 10(6)(viii), if it is received by any non resident individual as remuneration for services rendered in connection with his employment in a foreign ship where his total stay in India does not exceed a period days in that previous year.
Section B (2 Mark)
A project should be considered if the Profitability Index is
Section A (1 Mark)
Which one of the following equations correctly defines the dividend yield (Y) from a share of common stock?
Section A (1 Mark)
The difference between a wagering contract and insurance contract is ___________.
Section B (2 Mark)
Which of the following are the two skills associated with being a good listener?
Section A (1 Mark)
Investments that are difficult to convert to cash are said to have _________
Section C (4 Mark)
Read the senario and answer to the question.
Harish wants a monthly investment to achieve the goal of his children's higher education. For accumulation of fund you recommend Harish to invest in an investment vehicle which invests in the ratio of 20:80 in Debt and Equity. If Harish starts investing from 1st Dec 2010, what approximate amount should he set aside every month for each child to achieve the goal? Harish maintains separate investment accounts for Chirag and Vishesh and invests till they individually turn 21 years of age.
Section C (4 Mark)
Read the senario and answer to the question.
Mahesh’s company has made plans for the next year. It is estimated that the company will employ total assets of Rs. 1000 lakh: 50% of the assets being financed by borrowed capital at an interest cost of 8% per year. The direct costs are estimated at Rs. 500 lakh. All other operating expenses are estimated at Rs. 76 lakh. The good will be sold to customer at 140% of the direct costs. Income tax rate is assumed to be 30%. Calculate net profit margin and return on owners’ equity.
Section C (4 Mark)
Read the senario and answer to the question.
Nimita wants to know if she were to meet with an accident and get permanent disability in the third year of her Term Insurance policy, what amount of the premium due in the fourth year would be payable by her if the premium being paid towards the policy is Rs. 15,000 with sum assured of Rs. 50 lakh?
Section B (2 Mark)
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?
Section C (4 Mark)
Read the senario and answer to the question.
Mr. Saxena is planning to visit USA for the very first time in his carrier to promote software of his company and is expected to stay long. He wants to plan his journey in such a manner so that he can get maximum tax benefits in the FY 2007–08 from the residential status point of view. What is the latest date when he can afford to leave India & earn status of an NRI to get maximum tax benefits in assessment year 2008–09?
Section C (4 Mark)
As a CWM you are required to calculate the tax liability of an individual whose Taxable income is:
• $ 142700 in US dollars and he is a US citizen (married Individual Filing Joint returns and Surviving Spouses)
• $ 67250 in SGD and he is a citizen of Singapore
Section A (1 Mark)
Which one of the following definitions of hedge fund strategies is not correct?
Section C (4 Mark)
Read the senario and answer to the question.
Portfolio A had a return of 12% in the previous year, while the market had an average return of 10%. The standard deviation of the portfolio was calculated to be 20%, while the standard deviation of the market was 15% over the same time period. If the correlation between the portfolio and the market is 0.8, what is the Beta of the portfolio A?
Section C (4 Mark)
You purchased a call option for Rs3.45 seventeen days ago. The call has a strike price of Rs45 and the stock is now trading for Rs51. If you exercise the call today, what will be your holding period return? If you do not exercise the call today and it expires, what will be your holding period return?
Section B (2 Mark)
If an investor determines that next year’s earnings estimate is Rs2.00 per share and the company subsequently falters, the investor may not readjust the Rs2.00 figure enough to reflect the change because he or she is “anchored” to the Rs2.00 figure. This is not limited to downside adjustments—the same phenomenon occurs when companies have upside surprises
Which of the following Biases have been exhibited by the investor?
Section A (1 Mark)
Expenditure incurred by an employer on medical treatment and stay abroad of the employee shall not be taxed in the case of ___________.
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 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)
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?
Section B (2 Mark)
Which of the following Biases are exhibited by Active Accumulator?
Section B (2 Mark)
Investors will choose investments that resonate with their own personality or that have characteristics that investors can relate to their own behavior. Taking the opposite view, investors ignore potentially good investments because they can’t relate to or do not come in contact with characteristics of those investments. For example, thrifty people may not relate to expensive stocks (high price/earnings multiples) and potentially miss out on the benefits of owning these stocks.
Which of the following Availability Bias have been exhibited in the case above?
Section B (2 Mark)
You are given the following set of data on security ABC:
Calculate the expected return on security ABC?
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 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 B (2 Mark)
_____________ begins with the price at which a product that has been purchased from an Associated Enterprise AE is resold to an independent enterprise
Section B (2 Mark)
The current market price of a share of JVJ stock is Rs60. If a put option on this stock has a strike price of Rs55, the put
Section A (1 Mark)
Which of the following characteristics are unique to real estate that differ from other asset classes?
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 C (4 Mark)
Navin Corporation, a manufacturer of do-it-yourself hardware and housewares, reported earnings per share of Rs2.10 in 1993, on which it paid dividends per share of Rs0.69. Earnings are expected to grow 15% a year from 1994 to 1998, during which period the dividend payout ratio is expected to remain unchanged. After 1998, the earnings growth rate is expected to drop to a stable 6%, and the payout ratio is expected to increase to 65% of earnings. The firm has a beta of 1.40 currently, and it is expected to have a beta of 1.10 after 1998. The Risk Free rate is 6.25%.
What is the value of the stock, using the two-stage dividend discount model?
Section A (1 Mark)
A testator sometimes make two wills one relating to his property in his native country and other relating to his property in some foreign country this type of will is called
Section B (2 Mark)
Compulsory maintenance of account is required u/s 44AA of IT, if the gross receipt/ total sales exceed _______
Section A (1 Mark)
Mr. Sharma is aged 50 years at present. He has invested some amount in an annuity which will pay him after 10 years Rs. 25,000/- p.a. at the beginning of every year for 10 years. Rate of interest is 6% p.a. Calculate how much amount he has invested now?
Section C (4 Mark)
What is the portfolios standard deviation if you put 25% of your money into stock A which has a standard deviation of 15% and rest into stocks B which has a standard deviation of 10%. The correlation coefficient between the returns of the stocks is .75.
Section A (1 Mark)
How many sections are there in Householder’s Insurance Policy?
Section C (4 Mark)
Ms. Shweta wants to achieve the goal of higher education of her daughter after 15 years. She estimates that the funds required would be 30 lacs at then costs. She wants to invest monthly for this goal. You as a Wealth Manager suggest an asset allocation of 80% in Equity and 20% in Debt for 14 years and shifting the entire amount to liquid funds in the last year where the expected returns would be 6% p.a. If the returns in equity and debt funds are 14% and 8.50% respectively calculate the amount that needs to be invested in Equity and Debt Each Month.
Section B (2 Mark)
Rajiv's company was just surprised by a new competitor in their field. Rajiv wants to plan a way for his business to retake the lead. For this purpose, Rajiv offered a plan to compete in the market. Which one of the following parts of the strategic landscape has been described?
Section B (2 Mark)
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?
Section B (2 Mark)
What are the two strategies that have the broadest mandate across financial, commodity, and futures markets?
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.
Section A (1 Mark)
Independent Individualist has __________ risk tolerance
Section A (1 Mark)
The difference between the cash price and the futures price on the same asset or commodity is known as the
Section B (2 Mark)
Which of the following two outcomes is an example of Loss Aversion Bias:
Section B (2 Mark)
Which of the following Biases are exhibited by Independent Individualist?
Section B (2 Mark)
How much interest is paid in the 43rd monthly payment interval of a loan for Rs43 200 if the loan is amortized at a rate of 9.75% compounded annually over 7 years.?
Section A (1 Mark)
A _________ portfolio is a well-diversified portfolio constructed to have a beta of 1 on one of the factors and a beta of 0 on any other factor.
Section A (1 Mark)
The inventory turnover ratio and days sales outstanding (DSO) are two ratios that can be used to assess how effectively the firm is managing its assets in consideration of current and projected operating levels.
Section B (2 Mark)
Why tilting your portfolio towards growth stocks, may theoretically amplify its performance?
Section B (2 Mark)
If a portfolio manager has a good ability to select undervalued securities but a poor ability to forecast overall market, the following makes sense for him:
Section B (2 Mark)
Rakesh owes Rs. 10000 to Haresh who transfers the debt amount to Chirag. Haresh then demands the same from Rakesh, who does not have a notice of the transfer as per section 131 but still pays to Haresh. This payment is invalid &Chirag can sue Rakesh for the debt
Section C (4 Mark)
Suppose Nifty is at 4450 on 27th April. An investor, Mr. A enters a long straddle by buying a May Rs 4500 Nifty Put for Rs. 85 and a May Rs. 4500 Nifty Call for Rs. 122.
What would be the Net Payoff of the Strategy?
• If Nifty closes at 3729
• If Nifty closes at 5214
Section B (2 Mark)
Mansi needs Rs. 25,000/-, 5 years from now. She would like to make equal payments at the Begin of each year from now onwards into an account that yields annual ROI @ 7 % per annum. What should be her annual payments?
Section C (4 Mark)
Read the senario and answer to the question.
Calculate his Life Insurance Coverage Ratio based on his net worth.
Section B (2 Mark)
The Dow theory illustrates that the three forces that simultaneously affect stock prices are ____________.
Section B (2 Mark)
Mr. Gupta has got his stock insured against fire for Rs5,00,000/- ,during the year he lost the stock in his ware house for Rs. 4,00,000/-. The surveyor from insurance company gave his report that at the time of fire the stock in the ware house had value 6,00,000/-
Calculate what amount Mr. Gupta will receive from the insurance company.
Section A (1 Mark)
Which of the following can be the underlying for a commodity derivative contract?
Section C (4 Mark)
Read the senario and answer to the question.
If Mrs. Deepika, a conservative investor, has Rs. 50, lakhs today that she could invest for the next three months in a three month bank CD or in a stock .The bank CD offers a guaranteed return 6 % over the three-month period. Alternatively she thinks the price of the stock will rise by 5% over the next months. She is confused in taking the decision. Guide her in trade off between return and risk so that she makes a decision in choosing investments?
Section A (1 Mark)
In the Balance sheet of a firm, the debt equity ratio is 2:1.The amount of long term sources is Rs.12 lac. What is the amount of tangible net worth of the firm?
Section A (1 Mark)
Rapid accumulation stage suggests that the net worth is ________
Section A (1 Mark)
Which of the following might be used as a factor in an APT factor model?
Section A (1 Mark)
The legal heir of the deceased who receives family pension is allowed a standard deduction from such family pension received to the extent of:
Section B (2 Mark)
Which of the following statements regarding a buy and hold strategy are true?
Section B (2 Mark)
Sunil insured the building of his house for a sum of Rs.500000 against fire insurance. One day the house is totally gutted in a devastating fire. The insurance surveyors certified that the building is a total loss with no salvage value and that the insurable value of the building just prior to the loss was Rs.1000000. The insurer will pay to Sunil:
Section B (2 Mark)
Portfolio A has expected return of 10% and standard deviation of 19%. Portfolio B has expected return of 12% and standard deviation of 17%. Rational investors will
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)
A rate of interest of 10% semi-annual compounded quarterly would be equal to -------------------- % per annum compounded annually.
Section C (4 Mark)
Read the senario and answer to the question.
Calculate the retirement corpus required by Raman to generate his post-retirement expenses.
Section A (1 Mark)
A cognitive heuristic in which decisions are made based on how representative a given individual case appears to be independent of other information about its actual likelihood. We tend to think that trends we observe are likely to continue. Which of the following is most likely consistent with this bias?
Section A (1 Mark)
Debt investments in real estate, such as mortgages or deeds of trust, are called income property investments.
Section C (4 Mark)
Read the senario and answer to the question.
Keshav purchased a Health Insurance. The policy has a calendar-year deductible of Rs. 500 and 80:20 as coinsurance. Keshav was hospitalized with a covered illness on January 23rd 2009. This hospitalization was his first claim under the said policy for the calendar year. His covered medical expenses were Rs. 20,500. How much of this amount will the insurer pay and how much will Keshav be required to pay to the Hospital?
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 B (2 Mark)
Vikrant Juneja gifted his house property to his wife in year 2007. Mrs. Juneja then lets out this house @ Rs. 5000 per month. The income from such house property will be taxable in the hands of:
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)
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 C (4 Mark)
Find out the effective quarterly rate for 18% per annum compounded half yearly.
Section A (1 Mark)
For any given stock, which of the following must be true?
Section B (2 Mark)
In 2011-12, an individual receives a net dividend of £648. The equivalent gross income is:
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 B (2 Mark)
If Second National Bank has more rate-sensitive liabilities then rate-sensitive assets, it can reduce interest rate risk with a swap that requires Second National to
Section A (1 Mark)
___________is concerned with the rational solution to the problem at hand. It defines an idea that actual decisions should strive to approximate.
Section B (2 Mark)
An investment opportunity having a market price of Rs. 100,000 is available. You could obtain a Rs. 75,000, 25-year mortgage loan requiring equal monthly payments with interest at 9.5 percent. The following operating results are expected during the first year.
What is the Overall capitalization rate?
Section A (1 Mark)
These instruments rest on pools of credit derivatives that mainly insure against defaults on corporate bonds. The creators of these instruments do not have to buy and pool actual bonds but can create these instruments and generate revenues from selling and trading in them.
Section A (1 Mark)
The stage in venture Capital financing where the business plan is completed and presented to a venture capital firm is called________________.
Section C (4 Mark)
The returns of 2 shares are as follows
Calculate the covariance of returns.
Section B (2 Mark)
Differences between hedge funds and mutual funds are that
Section B (2 Mark)
Manav invests Rs. 500/- every 6 months towards a fund to pay for his children education. If the investment pays ROI @ 9 % per annum, compounded Semi Annually, then what will be the corpus after 10 years ?
Section C (4 Mark)
As a CWM you are required to calculate the tax liability of an individual whose Taxable income is:
• $ 85650 in US dollars and he is a US citizen (single individual)
• $ 159000 in SGD and he is a citizen of Singapore
Section C (4 Mark)
Paridhi has an investment portfolio of Rs.2,00,000; the initial portfolio mix is Rs.1,00,000 in stocks, Rs.60000 bonds and Rs.40000 in bank.
If market goes up by 10% and the value of bonds decreases by 10%, what should Paridhi do under the constant mix policy?
Section A (1 Mark)
The tendency to seek and interpret information that confirms existing beliefs. Our conclusions are unduly biased by what we want to believe. Which of the following is most likely consistent with this bias?
Section A (1 Mark)
All but one of the following are advantages of exchange-traded funds:
Section C (4 Mark)
Suppose an investor Mr. Kishan Raj is holding ABC Ltd. currently trading at Rs. 4758. He decides to establish a collar by writing a Call of strike price Rs. 5000 for Rs. 39 while simultaneously purchasing a Rs. 4700 strike price Put for Rs. 27.
What would be the Net Payoff of the Strategy?
• If Nifty closes at 4948
• If Nifty closes at 4858
Section A (1 Mark)
The minimum income criteria for Personal Loans in case of Salaried employees is:
