dumpspedia logo
Section B (2 Mark)
A dealer sold one January Nifty futures contract for Rs.250,000 on 15th January. Each Nifty futures contract is for delivery of 50 Nifties. On 25th January, the index closed at 5100. How much profit/loss did he make ?
Section A (1 Mark)
Response of listening falls under which one of the following categories?
Section C (4 Mark)
A portfolio consists of 3 securities.
What is the standard deviation of the portfolio?
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)
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)
A(n) _________________________ occurs when two banks agree to exchange a portion or all of the loan repayments of their customers.
Section A (1 Mark)
Which one of the following has not caused the huge growth in hedge funds and private equity?
Section C (4 Mark)
Read the senario and answer to the question.
Mr. Bhatia owns a Maruti Wagonr with a monthly EMI of Rs. 6,312. The above loan will be completely repaid by August 2008. Mr. Bhatia planning to purchase a new car worth of Rs. 15 lakh. For this he has to take a full value loan of the car with 9% interest for 5 years. But his present car is in good condition and life of this car is approximately another 5 years repairs and maintenance cost are minimum. If he postpones his car purchasing plan now and deposit the same EMI outflow required for new car into an SIP with a minimum 15% yield for the next five years, then calculate the fund he can accumulate?
Section B (2 Mark)
As per article 11 Double Taxation Avoidance Agreement with UAE, Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. However, such interest may be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest, the tax so charged shall not exceed:
(a) _______ percent of the gross amount of the interest if such interest is paid on a loan granted by a bank carrying on a bona fide banking business or by a similar financial institution; and
(b) _______ percent of the gross amount of the interest in all other cases.
Section A (1 Mark)
Garima deposits Rs. 2,000/- every month in an account and is getting interest @ 12 % per annum compounded monthly. How much will be her nest egg after 10 years ?
Section A (1 Mark)
While choosing wealth management firms the criteria a client would consider include is/are:
Section B (2 Mark)
What is the outstanding balance at the 23rd payment interval of a 16-year loan for Rs11 234 with semi-annual payments and an interest rate of 7.95% compounded quarterly?
Section A (1 Mark)
Deduction u/s 80U in case of permanent physical disability (including blindness) allowed to:
Section A (1 Mark)
For making a personal financial statement for a client, the optimum cash levels would be
Section A (1 Mark)
A 15 year annuity due has a future value of Rs. 15,00,000/- If ROI is 9 % per annum, then how much will be each annuity amount ?
Section B (2 Mark)
Fifteen Year ago, Sandeep set up his initial allocation in her defined contribution plan by placing an equal amount in each asset class and never changed it. Over time, he increased his contribution by 3 % per year until he reached maximum amount allowed by law. Which of the following biases that Sandeep suffers from?
Section C (4 Mark)
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?
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)
Mr. Chopra runs a Garment Factory, he is very concerned about his retirement and wants you to help him out in planning for it. His Current annual expenses are Rs. 12,00,000 which would be rising at an annual rate of 8% pre- retirement and 2% post retirement. His current age is 50 years and he wants to work till the age of 65. The expected life expectancy in his family is 75 years. Calculate the monthly contribution he must make till his retirement if the pre- retirement returns are 12% p.a. compounded monthly and post-retirement returns are 8% p.a compounded annually.
Section C (4 Mark)
Company A is financed with 90 percent debt, whereas Company B, which has the same amount of total assets, is financed entirely with equity. Both companies have a marginal tax rate of 35 percent. Which of the following statements is most correct?
Section B (2 Mark)
The expected market return is 16 percent. The risk-free rate of return is 7 percent, and BC Co. has a beta of 1.1. Their required rate of return is
Section B (2 Mark)
The Motor Vehicle Insurance Policy has inbuilt cover for death/disability of driver/owner caused by accident during the use of the insured motor vehicle up to Rs. __________ in case of car/commercial vehicle and Rs. _________ in case of two wheelers.
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)
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)
Which of the following Biases are exhibited by Passive Preserver?
Section B (2 Mark)
Mehak Rana took a loan of Rs 20 Lakh in September 2010 which is payable in 10 years (monthly installments).The rate of interest is 10% p.a.
What would be the remaining principal amount after September 2012?
Section A (1 Mark)
A(n) _____________ is an over-the-counter agreement offering protection against loss when default occurs on a loan or other debt instrument.
Section A (1 Mark)
Vineet invests Rs. 5000/- per month at the beginning of the month for 10 years in Recurring Deposit account that pays 8.5% p.a interest compounded quarterly. What will be the accumulated amount in his account.
Section C (4 Mark)
Read the senario and answer to the question.
Calculate the Solvency ratio?
Section A (1 Mark)
Pure premium and Loss Ratio methods are two methods to determine
Section B (2 Mark)
The ____________ provides an unequivocal statement on the expected return-beta relationship for all assets, whereas the _____________ implies that this relationship holds for all but perhaps a small number of securities.
Section A (1 Mark)
Fiscal termites are factors that threaten the integrity of tax systems, and most of which relate to the internationalization of tax. These are:
Section B (2 Mark)
The employer had purchased a car for Rs. 3,00,000 which was being used for official purposes. After 2 year 6 months of its use, the car is sold to R, the employee, for Rs. 1,20,000. The value of this perquisite shall be
Section B (2 Mark)
Commutation of pension up to a limit of _______________ is tax exempt in case the gratuity is also received.
Section A (1 Mark)
______________represents the corollary effect—the irrational denial of responsibility for failure.
Section A (1 Mark)
Conservative retirees likely have ____ than they did early in their careers.
Section B (2 Mark)
Which of the following activities is/are a part of “Building the CRM project foundation phase “in CRM implementation?
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 A (1 Mark)
The basic competitive factors facing industries include all of the following except:
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 A (1 Mark)
The steps to establishing an investment policy are to state the
Section C (4 Mark)
Data on following mutual funds given below:
Risk free return is 8%. Calculate Treynor measure.
Section A (1 Mark)
The principle of _____________ ensures that an insured does not profit by insuring with multiple insurers
Section A (1 Mark)
A business angel is best described in which one of the following statements?
Section A (1 Mark)
Which of the following is a special human trait that we need to sharpen and use very often in CRM?
Section C (4 Mark)
Consider a three-month futures contract on gold. The fixed charge is Rs.310 per deposit and the variable storage costs are Rs.52.5 per week. Assume that the storage costs are paid at the time of deposit. Assume further that the spot gold price is Rs.15000 per 10 grams and the risk-free rate is 7% per annum. What would the price of three month gold futures if the delivery unit is one kg? Assume that 3 months are equal to 13 weeks.
Section A (1 Mark)
Which type of portfolio allocation is usually done once every few years?
Section A (1 Mark)
Which of the following is classified as passive income in US?
Section C (4 Mark)
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.)
Section C (4 Mark)
Read the senario and answer to the question.
Calculate income from House property for Mr. Keshav for assessment year 2010-11.
Section C (4 Mark)
OHM Corporation, an environmental service provider, had revenues of Rs209 million in 1992 and reported losses of Rs3.1 million. It had earnings before interest and taxes of Rs12.5 million in 1992, and had debt outstanding of Rs109 million (in market value terms). There are 15.9 million shares outstanding, trading at Rs11 per share. The pre-tax interest rate on debt owed by the firm is 8.5%, and the stock has a beta of 1.15. The firm's EBIT is expected to increase 10% a year from 1993 to 1996, after which the growth rate is expected to drop to 4% in the long term. Capital expenditures will be offset by depreciation, and working capital needs are negligible. (The corporate tax rate is 40%, and the Risk free rate is 7%.)
Estimate the value of the firm.
Section C (4 Mark)
Ms. Deepika is a famous Bollywood actress having a busy and successful professional business venture in the name of ‘Millennium Production House” with her childhood friend Navin. Initially she received few small assignments. But after a documentary film, which was welcomed by people of Mumbai, she becomes quite successful. She wants to set aside today a capital sum to be liquidated over the next 10 years for the care of her aged mother living alone in MADARUAI with her sisters. The desired income stream for her mother as per her status is Rs. 2,40,000 p.a. beginning after one year and rising 5% p.a. each year thereafter. Deepika belives that the investment earnings on the fund will be 8% p.a.
In the last 8 years, there was no looking back in the business with 22 employees and around Rs. 1.25 crore of annual income, net of all expenses. She leads a very comfortable life as a “modern successful single lady”. She has already constructed a house valuing Rs. 3.75 crore and has a portfolio of assets which include precious metals like gold, silver etc. worth Rs. 1.25 crore, direct and indirect investment in equities (mutual funds) Rs. 2.75 crores, bank deposits and small savings scheme investments Rs. 0.75 crore.
You as a CWM® has been approached by her, for advice on retirement planning. She expects to work for another 10 years and after that wants to pursue her hobbies of traveling and photography and want to be active in social work. She has expressed desire to leave half of her estate in equal proportion to her two nephews and donate other half to charitable trust “Mother Care”.
Section B (2 Mark)
As per Double Taxation Avoidance Agreement, the Royalties in UK is charged at:
Section B (2 Mark)
Resident but not ordinary resident (RNOR) is ____________ on Indian Income and ___________ on Foreign Income.
Section A (1 Mark)
Incentive schemes, additional services and sentiments based scheme are called:
Section B (2 Mark)
Consider these two investment strategies:
Strategy ___ is the dominant strategy because __________.
Section A (1 Mark)
The __________the suggested deviation from the rational portfolio asset allocation, the _________ the need to mitigate the investor’s behavioral biases
Section A (1 Mark)
In which year can the subscriber to a PPF account take the first loan from the opening of the account?
Section A (1 Mark)
The price that the buyer of a put option pays to acquire the option is called the
Section A (1 Mark)
Income which accrue or arise outside India but are received directly in India are taxable in case of:
Section A (1 Mark)
Essential requirement for the person who can attest the will is that he
Section A (1 Mark)
The covariance of the market returns with the stocks returns is 0.008. The standard deviation of the market is 8% and standard deviation of stock’s return is 11%. What is the correlation coefficient between stocks and market returns?
Section C (4 Mark)
Samantha celebrated her 21st birthday today, her father gave her Rs. 6,25,000/- which is deposited in a account that pays a ROI of 12.25% p.a. compounded monthly. If she wants to withdraw Rs. 7,50,000 on her 31st. Birthday and balance on her 41stBirthday. How much can she withdraw on her 41st. birthday ?
Section A (1 Mark)
_____________allow investors to increase diversification in direct real estate holdings by investing in groups of real estate projects.
Section B (2 Mark)
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:
Section B (2 Mark)
Which of the following is/are the Potential Challenges for wealth management players in India?
Section A (1 Mark)
Hedge funds often seek to take advantage of market inefficiencies such as:
Section A (1 Mark)
A financial contract that obligates one party to exchange a set of payments it owns for another set of payments owned by another party is called a
Section 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)
Consider the single-factor APT. Stocks A and B have expected returns of 15% and 18%, respectively. The risk-free rate of return is 6%. Stock B has a beta of 1.0. If arbitrage opportunities are ruled out, stock A has a beta of __________.
Section C (4 Mark)
As a CWM you are required to calculate the tax liability of an individual whose Taxable income is:
• $ 178650 in US dollars and he is a US citizen (single individual)
• $ 85300 in SGD and he is a citizen of Singapore
Section C (4 Mark)
Read the senario and answer to the question.
Pallavi’s marriage is expected by the end of December, 2010 with an expected present cost of Rs. 24,00,000. He is expected to realize from his Tatanagar Flat 18, 00,000 by that time. Calculate what additional amount is required for his daughter’s marriage. With 8% pa. risk free rate compounding monthly what amount he has to save per month (BEGIN) in a debt fund?
Section B (2 Mark)
In a wealth management Platform which of the following is/are the functions of Middle/Back Office – Advisor?
Section C (4 Mark)
In 2011-12, Lily (who is resident and ordinarily resident in the UK for the year) earns a gross salary from her UK employment of £45,000. PAYE (Pay as you Earn)of £7,600 is deducted from this income.
She owns a holiday home in France and receives rents of £2,250 for the year. This is the net figure after withholding tax of 25% has been deducted.
Her income tax payable for the year is:
Section C (4 Mark)
As a CWM you are required to calculate the tax liability of an individual whose Taxable income is:
• $125000 in US dollars and he is a US citizen (single individual)
• $109000 in SGD and he is a citizen of Singapore
Section C (4 Mark)
To create a common size income statement ____________ all items on the income statement by ____________.
Section B (2 Mark)
Mr. Nimesh is bullish about ABC Ltd stock. He buys ABC Ltd. at current market price of Rs. 4000 on 4 July. To protect against fall in the price of ABC Ltd. (his risk), he buys an ABC Ltd. Put option with a strike price Rs.3900 (OTM) at a premium of Rs. 143.80 expiring on 31st July.
What would be the Pay-off of the strategy if the stock closes on 4200 at expiry?
Section A (1 Mark)
A loan where the borrower pays interest each period, and repays some or all of the principal of the loan over time is called a(n) _________ loan.
Section A (1 Mark)
The minimum income criteria for Personal Loans in case of Salaried employees is:
Section C (4 Mark)
Read the senario and answer to the question.
Harish incurred Rs. 10 Lakh on the construction of his house five years ago which has depreciated today to Rs. 7 Lakh. The cost of construction over the period has gone up by 70%.The depreciated value of household items is Rs. 2.5 Lakh and their present cost of replacement is Rs. 4 Lakh. Harish wants to buy a Householders’ insurance policy in such a way that the house is insured on reinstatement basis and household goods on the basis of written down value. How much total insurance coverage should he take from the insurance company?
Section B (2 Mark)
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?
Section A (1 Mark)
A type of trust in which assets are passed down to the grantors grandchildren not the grantors children
Section A (1 Mark)
A document that is executed by the sellor of the flat so that the Cooperative Society to which the flat belongs and the purchaser is completely indemnified against any claims that any other person may make on the rights of ownership of the flat or other any that is yet unpaid by the seller ( eg. taxes) is known as_________
Section C (4 Mark)
Tom dies in January of the current year and leaves his wife Jeanne a $50,000 insurance policy. Jeanne elects to receive the proceeds at $10,000 per year plus interest, for five years. In the current year, she receives $12,000 ($10,000 plus $2,000 interest).
How much must Jeanne include in her gross income?
Section A (1 Mark)
Manoj owns five hundred shares of ABC Ltd. Around budget time, he gets uncomfortable with the price movements. Which of the following will give him the hedge he desires (assuming that one futures contract = 100 shares) ?
Section B (2 Mark)
As Per Article 11 Double Taxation Avoidance Agreement with UK, a dividend paid by a company which is a resident of the United Kingdom to a resident of India may be taxed in India. Where under paragraph 2 of this Article, a resident of India is entitled to a tax credit in respect of that dividend, tax may also, be charged in the United Kingdom and according to the laws of the United Kingdom on the aggregate of the amount or value of the dividend and the amount of the tax credit, at a rate not exceeding ___________ percent.
Section B (2 Mark)
You purchased one XYZ March 50 call and sold one XYZ March 55 call. Your strategy is known as
Section B (2 Mark)
Which of the following statements with respect to DTAA is/are correct?
Section B (2 Mark)
Calculate the total maturity amount payable in a policy of Rs. 4,00,000/-, if the term of the policy was 17 years and bonus was Rs. 52 per thousand per annum and a final bonus of Rs. 125/- per thousand was payable.
Section B (2 Mark)
___________ applies where there are multiple transactions which are inter-related and cannot be evaluated separately for the purpose of determining arm’s length price of any one transaction.
Section A (1 Mark)
Which of the following can be the underlying for a commodity derivative contract?
Section C (4 Mark)
Mr. XYZ is bullish about ABC Ltd stock. He buys ABC Ltd. at current market price of Rs. 4000 on 4th July. To protect against fall in the price of ABC Ltd. (his risk), he buys an ABC Ltd. Put option with a strike price Rs. 3900 (OTM) at a premium of Rs. 143.80 expiring on 31st July.
What would be the Net Payoff of the Strategy?
• If ABC Ltd closes at 3458
• If ABC Ltd closes at 4352
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 B (2 Mark)
In 2011-12, an individual receives net building society interest of £792. The equivalent gross income is:
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 C (4 Mark)
Amit an industrialist wants to buy a flat in a housing society presently costing Rs. 35,00,000/- after 6 years. The cost of the house is expected to increase by 15% p.a for the first 3 years and by 10% in the remaining years. Amit wants to start a SIP with monthly contributions in Birla Front Line Equity Mutual Fund to pay for the down payment of the house which would be 25% of the house value at that time. You as a CWM expect that the fund would give ROI of 14% p.a. compounded monthly in the next 10 years. Please advise Amit the monthly SIP amount starting at the beginning of every month for the next 6 years to fulfill his goal of buying the Flat he desires.
Section A (1 Mark)
A bank is considering making a loan to Neelam Pandey. The bank is looking at her credit report from Equifax and also examining the reason Neelam has put on the loan application for needing the loan? What aspect of evaluating a consumer loan application is the bank looking at?
Section B (2 Mark)
Which of the following statements is/are correct with respect to Mental Accounting?
Section C (4 Mark)
Read the senario and answer to the question.
Nimita purchased 500 shares of ABC Ltd., a listed company at Rs. 45 per share on Sep. 15,2002. The company offered to buy back its shares on June 15, 2009 which Nimita accepted at a price of Rs. 75 per share on Jul 1, 2009. What is the tax liability in the hands of Nimita for this transaction for Assessment Year 2010-11? Cost inflation indices are 2002-03: 447 and 2009-10 632. (Ignore Education Cess)
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 C (4 Mark)
Read the senario and answer to the question.
Vinay wants to have 80% of the desired retirement corpus from his monthly savings from now itself. If he expects to earn 12% p.a. on these savings, how much amount should the couple save at the end of each month to achieve this target?
Section B (2 Mark)
Compulsory maintenance of account is required u/s 44AA of IT, if the gross receipt/ total sales exceed _______
Section B (2 Mark)
A person is treated as being UK resident for a tax year if he or she is physically present in the UK for at least ___ days in the year or makes regular visits to the UK averaging at least ___ days per year. Fill in the blanks.
Section B (2 Mark)
In a wealth management Platform which of the following is/are the functions of Middle/Back Office – Advisor
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)
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)
An employee who is not resident in the UK will be liable to UK income tax:
Section A (1 Mark)
Which of the following types of income is received by individuals without deduction of basic rate tax?
Section C (4 Mark)
Read the senario and answer to the question.
You advise Sajan to accumulate a retirement corpus at the age of 58 years to sustain 70% of pre-retirement household expenses till his lifetime, and thereafter 50% of pre-retirement expenses till Jennifer’s expected life (instead of Stephanie’s life). Such corpus shall generate an inflation linked monthly outflows, if invested in risk free instruments. He would accumulate at least Rs. 70 lakh for the corpus through his PPF A/C. by suitably investing in the scheme and extending the account till his retirement. For the balance amount of corpus, he wishes to start a monthly SIP immediately in his existing Balanced MF scheme. You calculate such amount to be _________.
Section A (1 Mark)
According to behavioral finance, investors prefer dividends because:
Section A (1 Mark)
Which among the following is not an advantage of setting up a trust?
Section A (1 Mark)
In case of self occupied property, higher deduction u/s24(b) for interest on loan for construction can be claimed if borrowing was made
Section A (1 Mark)
Income of Rs. 300000 is received in Sri Lanka by a resident of India. But later on Rs. 50000 is remitted to India
Section C (4 Mark)
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?
Section B (2 Mark)
A disadvantage of using swaps to control interest rate risk is that
Section A (1 Mark)
Which of the following is true regarding the resistance level?
Section A (1 Mark)
Which of the followings are the important features of Real estate Investment?
Section C (4 Mark)
Read the senario and answer to the question.
Ms. Deepika is interested in investments in foreign markets. Her brother is working in one of reputed American company in India and that is offering him some shares under ESOP scheme. This company is not listed in India. It is listed in New York Stock Exchange. Ms. Deepika is asking her manager how this transaction will took place for her brother?
Section A (1 Mark)
A bank is considering making a loan to Jitesh Desai. Jitesh is a commissioned sales broker. Some months he earns as much as Rs 1,00,000 and in other months he earns virtually nothing. Which aspect of evaluating a consumer loan would this be concerned with?
Section A (1 Mark)
We divide phenomena into different departments and try to optimize each department rather than the whole. Which of the following is most likely consistent with this bias?
Section C (4 Mark)
In addition to social security benefits of $6,000, Mr. and Mrs. Lopez have adjusted gross income of $36,000, tax-exempt interest of $1,000 and will file a joint return.
Determine the taxable portion of their social security benefits.
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)
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)
An investor is bearish about Tata Motors and sells ten one-month ABC Ltd. Futures contracts at Rs.6,06,000. On the last Thursday of the month, Tata Motors closes at Rs.600. He makes a _________. (assume one lot = 100)
Section B (2 Mark)
Narayan expects to receive Rs 25000 in net receipts each year for five year and to sell the property for Rs 350,000 at the end of the five-year period, if Narayan expects a 15% return, what would be the value of the property?
Section B (2 Mark)
Which of the following is an inferential data (i.e. data which may not be correctly obtained by simply asking a direct question)?
Section A (1 Mark)
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?
Section B (2 Mark)
The Dow theory illustrates that the three forces that simultaneously affect stock prices are ____________.
Section A (1 Mark)
An individual is said to be a resident in India in the previous year (in which the Feb month has 29 days) if he is in India in that year for a period of ______days or more.
Section A (1 Mark)
Which of the following measures is lowest for a currently callable bond?
Section A (1 Mark)
A zero-investment portfolio with a positive expected return arises when _________.
Section C (4 Mark)
Maxis Ltd reported Earnings Per Share of Rs 2.10 in 1993, on which it paid dividends per share of Rs 0.69. 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 of Return is 6.25%.
What is the value of the stock, using the two-stage dividend discount model?
Section B (2 Mark)
As per Double Taxation Avoidance Agreement, the Royalties in Mauritius is charged at:
Section B (2 Mark)
Calculate the duration of a 10 year annual annuity that has a yield of 7%.
Section B (2 Mark)
When returns to an investor’s portfolio increase, to what does he believe the change in performance is mainly due (if the investor exhibits self attribution bias)?
Section A (1 Mark)
____________refers to the tendency of people to think of currency in nominal, rather than real terms
Section C (4 Mark)
At end of this year ICICI Ltd. will pay a dividend on its stock of Rs. 5 per share. The dividend is expected to remain same for next year. During third year dividend is expected to be Rs.6 from there on, the dividend is expected to grow at 5% per year indefinitely. Stocks with similar risk are currently priced to provide a 10% expected return. What is the intrinsic value of ICICI Ltd.
Section B (2 Mark)
Mr.Neeraj has a portfolio consisting of two stocks A & B has a standard deviation of 5% while stock B has a standard deviation of 15%. Stock A comprises 40% of the portfolio and stock B consists of 60%. If the correlation of returns of A and B is 0.5, the variance of return on the portfolio is_______
Section A (1 Mark)
The covariance of market’s returns and stock returns is 0.005. The standard deviation of market’s return is 5%. What is the stock’s beta?
Section A (1 Mark)
The profits of a controlled foreign company which are apportioned to a UK company are charged to corporation tax at the UK company's average rate of tax.
Section A (1 Mark)
The way to reduce tax liability by taking full advantage provided by the Act is
Section C (4 Mark)
Suppose ABC Ltd. is trading at Rs 4500 in June. An investor, Mr. A, shorts Rs 4300 Put by selling a July Put for Rs. 24 while shorting an ABC Ltd. stock. The net credit received by Mr. A is Rs. 4500 + Rs. 24 = Rs. 4524.
What would be the Net Payoff of the Strategy?
• If ABC Ltd closes at 4053
• If ABC Ltd closes at 5025
Section A (1 Mark)
Generally speaking, high severity of losses will be accompanied by
Section C (4 Mark)
Data on following mutual funds is given below:
Risk free return is 8%. Calculate Sharpe measure.
Section A (1 Mark)
A muslim gentleman can leave his will, bequeathing all his properties to someone often than his legal heirs to the extent of…………….
Section B (2 Mark)
The lesson from the credit crisis of 2007-2009 is that securitized assets and credit swaps are:
Section C (4 Mark)
Mr. Mahesh Chabaria, aged 52 years, currently owns an transport firm. His family consists of his wife Nitika, also aged 52 years, son Manish aged 29 and daughter Nidhi aged 27. Nitika is a housewife and both the children are happily married and well settled. The couple anticipates their life expectancy to be 80 years each.
Income and Expenses:
The gross annual income of Mahesh for the previous year 2007-08 is expected to be Rs. 1000000. The couples’ household expenses are estimated to be Rs. 32000 per month. Taking into account incidental expenses of another Rs. 5000 the net expenses of the family are estimated to be Rs. 37000 per month for the previous year 2007-08. Mahesh has a net saving of Rs. 1800000 which he would like to invest for his post retirement purposes.
Assets Allocation:
Mahesh has hardly 8 years left for retirement and thus he is not very aggressive in his investments. Returns of his portfolio based on asset allocation during the accumulation and distribution phase are calculated as below:
Assumptions:
Section B (2 Mark)
If the currency of your country is appreciating, the result should be to ______ exports and to _______ imports.
Section B (2 Mark)
Customer relationship management applications dealing with the analysis of customer data to provide information for improving business performance best describes by which of the following?
Section C (4 Mark)
Mr. XYZ is bullish on Nifty when it is at 4191.10. He sells a Put option with a strike price of Rs. 4100 at a premium of Rs. 170.50 expiring on 31st July. If the Nifty index stays above 4100, he will gain the amount of premium as the Put buyer won’t exercise his option. In case the Nifty falls below 4100, Put buyer will exercise the option and the Mr. XYZ will start losing money. If the Nifty falls below 3929.50, which is the breakeven point, Mr. XYZ will lose the premium and more depending on the extent of the fall in Nifty.
What would be the Net Payoff of the Strategy?
• If Nifty closes at 3400
• If Nifty closes at 4800
Section C (4 Mark)
Mr. Amit Jain has bought a house today which cost him Rs. 50 lacs by taking a loan of 30lacs for 15 years at 11% per annum compounded monthly. He currently has 10 lacs of financial assets and plans to save Rs. 3.25 lacs every year at the beginning of the year for the next 5 years. All his investments are expected to grow at a ROI of 15%per annum compounded quarterly. What will be the net worth of Mr. Amit after 5 years if the value of the house after 5 years is expected to be 75 lacs.
Section B (2 Mark)
Which of the following statements are correct with regard to Bailard, Biehl, and Kaiser Five-Way Model?
Section B (2 Mark)
Ajay is considering to purchase a house which will bring rental income of Rs. 15,000/- p.m at the end of month. Ajay is looking for 12% returns and he is expecting to sell the property after 5 years for Rs. 6 lac. What price Ajay should pay for this property now?
Section C (4 Mark)
Mr. Shyam has a portfolio consisting of two stocks A & B. Stock A has a standard deviation of 5 % while stock B has a standard deviation of 15%. Stock A comprises 40% of the portfolio and Stock B consists of 60%. If the correlation of returns of A & B is .5, the variance of return on the portfolio is _________.
Section A (1 Mark)
Which of the following is not a broad category of Alpha drivers?
Section B (2 Mark)
What an employee should check in his retirement benefit plan offered by the employer?
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)
Azhar aged 30 is a disciplined investor. He has started depositing Rs. 25,000 every year in an account that pays a return of 9% every year. He plans to increase his contribution by Rs. 5000 every year till his age 50. Calculate the amount he would be having in his account at this age.
Section B (2 Mark)
How much interest is paid in total on a 3-year loan for Rs27 400? The interest rate is 8.6% compounded monthly and the payments are monthly?
Section A (1 Mark)
When deciding under uncertainty, which of the following generally accepted guidelines that a decision maker should follow:
Section B (2 Mark)
Ram and Mrs. Ram hold 20% and 30% equity shares in Anand Ltd. respectively. They are employed in Anand Ltd. (monthly salary being Rs.20000 and Rs. 30000 respectively) without any technical / professional qualification.
Other incomes of Ram and Mrs. Ram are Rs. 70000 and Rs. 100000 respectively. The net income of Ram and Mrs. Ram for the assessment year 2013-14 shall be.
Section B (2 Mark)
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.
Section A (1 Mark)
Holistic advisory services which cater to specific client segments such as entrepreneurs, professionals are known as_______________.
Section C (4 Mark)
Roger deposits Rs. 10,00,000 in a bank account on 1st March 2005 and another Rs. 5,00,000 on 1st March 2011. He wants to withdraw all of this money with interest on 1st March 2015. If the account pays ROI of 11% p.a. compounded quarterly what amount can he withdraw from this account?
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 Rs100. If the risk-free rate is 5%, the stock price is Rs103, and the put sells for Rs7.50, what should be the price of the call?
Section A (1 Mark)
Under which of the following categories of General Warranty Deed does the Grantor warrants that the property is free of any liens or encumbrances unless they're specifically stated in the deed?
Section A (1 Mark)
When markets are in equilibrium, the CML will be upward sloping
Section B (2 Mark)
A perspective on decision making based on the assumption that people typically show risk aversion; hence, when making decisions they view whatever losses may be involved as more painful than equivalent gains are desirable. We have an irrational tendency to be less willing to gamble with profits than with losses.
Section C (4 Mark)
Mr. XYZ buys a Nifty Call with a Strike price Rs. 4100 at a premium of Rs. 170.45 and he sells a Nifty Call option with a strike price Rs. 4400 at a premium of Rs. 35.40.
What would be the Net Payoff of the Strategy?
• If Nifty closes at 4343
• If Nifty closes at 3419
Section A (1 Mark)
_________________makes us throw more good money after money already gone bad.
Section A (1 Mark)
Loans to individuals and families to finance the purchase of new homes are known as:
Section A (1 Mark)
The principle that people do not buy or rent real estate, but judge properties as different sets of benefits and costs is called
Section C (4 Mark)
Read the senario and answer to the question.
Mr. Bhatia is interested to invest in a mutual fund SIP account and expecting which will grow by atleast 12% for Neena’s education need. Calculate how much he has to deposit per month?
Section A (1 Mark)
__________ is the most important investment decision because it determines the risk-return characteristics of the portfolio.
Section A (1 Mark)
CRM as a discipline that depends on people, process, information and __________
Section B (2 Mark)
Calculate the treynor measure, Sharpe measure and Jensen measure from the following data:
The mean risk free rate was 6 percent.
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 B (2 Mark)
The income of any university or other educational institution existing solely for educational purposes and not for the purposes of profit is exempt under clause (iiiad) of Section 10(23C) if the aggregate annual receipts’ of such university or educational institution do not exceed.
Section B (2 Mark)
Both __________ depend on electronic information that has been collected about customers, in place of human knowledge, to build and manage relationships.
Section C (4 Mark)
What amount needs to be deposited today in an account that would pay Rs. 1,10,000 per year for the first 10 years and Rs. 2,25,000 for the next 5 years. If the ROI for the first 10 years if 10.75 % p.a. compounded annually and 13% p.a. compounded quarterly for the balance period?
Section B (2 Mark)
Which of the following investment options would most likely be part of the portfolio of a Moderate investor?
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 A (1 Mark)
The eligibility Criteria for Self Employed Professionals & Businessman for minimum annual income of the applicant in case of personal loan is:
Section A (1 Mark)
A document which is used to hand over the legal powers to sign on legal documents pertaining to the property to someone other than the owner is called_____________
Section C (4 Mark)
Read the senario and answer to the question.
What will be the taxable amount of Gratuity on his retirement?
Section C (4 Mark)
Dab Ltd manufactures, markets, and services automated teller machines. The following are selected numbers from the financial statements for 1992 and 1993 (in millions):
The firm had capital expenditures of Rs15 million in 1992 and Rs18 million in 1993. The working capital in 1991 was Rs180 million.
Estimate the cash flows to equity in 1992 and 1993. (in Rs Millions)
Section B (2 Mark)
Ramesh living in Kolkata is a trustee for Brijesh living in Mumbai, Ramesh remits trust funds to Brijesh by bills drawn by a person of high creditworthiness in favor of the trustee as such and payable at Mumbai. The bills later got dishonored. Is Ramesh bound to make good the loss?
Section A (1 Mark)
Ratio of loading charge over the gross rate is called _________
Section A (1 Mark)
For calculating the benefit under Entertainment allowance, Salary means,
Section C (4 Mark)
Saurabh contributes Rs. 10,000 every year starting from the end of the 5th year from today till the end of 12th year in the account that gives a ROI of 7.75% p.a. compounded half yearly. Calculate the Present Value of his contribution today.
Section B (2 Mark)
Conventional theories presume that investors ____________ and behavioral finance presumes that they ____________.
Section B (2 Mark)
NRIs are granted a special benefit by way of an option of being taxed at concessional tax rate of ________ as regards "investment income" and _______ as regards "long term capital gains" arising from "specified assets.
Section B (2 Mark)
As a result of a lawsuit, Catherine was awarded $300,000 for compensatory damages and $400,000 for punitive damages. What is the taxable income resulting from this suit?
Section B (2 Mark)
What are the two strategies that have the broadest mandate across financial, commodity, and futures markets?
Section A (1 Mark)
____________ may be responsible for the prevalence of active versus passive investments management.
Section A (1 Mark)
After originally investing Rs10,000 and selling your investment for Rs 12,000, you reinvest the total amount and tell yourself that you will not be concerned if you lose Rs 2,000 in this new investment. You are likely demonstrating which type of judgment error?
Section C (4 Mark)
Read the senario and answer to the question.
If the interest on a sum of amount is compounded annually at the rate of 14% per annum for 3 years, what is the effective continuously compounding rate of interest?
Section A (1 Mark)
Mr. Rajesh was the owner of an uninsured property. But unfortunately the property caught fire because of which he suffered severe financial losses. The reason Mr. Rajesh suffered losses as he did not cover:
Section B (2 Mark)
In 2011-12, George has property income of £8,000 and net bank interest of £4,000. He claims the personal allowance of £7,475. What is the income tax borne for the year?
Section A (1 Mark)
If POA in respect of in moveable property of value more than ………………….it must be registered
Section C (4 Mark)
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?
Section B (2 Mark)
In US which form tells your employer all they need to know about your tax-related allowance information?
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 B (2 Mark)
Sudhir has invested Rs. 60,000, 30% of which is invested in Company A, which has an expected rate of return of 15%, and 70% of which is invested in Company B, with an expected return of 12%. What is the return on Sudhir’s portfolio?
Section B (2 Mark)
Equity stock of X ltd. is currently selling at Rs. 35/- per share. The dividend expected next year is Rs. 2/- per share and the investor’s required return in this stock is 15 % per annum. If the constant Growth Model applies to X ltd. then calculate the Growth Rate.
Section B (2 Mark)
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 A (1 Mark)
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?
Section C (4 Mark)
You are considering adding a new product to your firm's existing product line. It should cause a 15 percent increase in your profit margin (i.e., new PM = old PM x 1.15), but it will also require a 50 percent increase in total assets (i.e., new TA = old TA x 1.5). You expect to finance this asset growth entirely by debt. If the following ratios were computed before the change, what will be the new ROE if the new product is added and sales remain constant?
Section A (1 Mark)
In US which of the following does not count as an itemized deduction on income tax?
Section A (1 Mark)
An equity analyst working for a growth oriented mutual fund has a tendency to misvalue the stocks of popular companies that she has previously recommended and the fund already owns. Her behavior is most likely consistent with which of the following biases?
Section A (1 Mark)
The risk that occurs when the index used for determination of interest earned on the CDO trust collateral is different from the index used to calculate the interest to be paid on the CDO trust is known as______________.
Section A (1 Mark)
Which of the following statements about Real Estate Investment Trusts is/are true?
Section A (1 Mark)
Following is/ are the component(s) of Personal Financial Statements
Section C (4 Mark)
Vikas has an investment portfolio of Rs.100000, and a multiplier of 2. The initial portfolio mix is Rs. 50000 in stocks and Rs. 50000 in bonds. If stock market goes up by 20%, what should Vikas do under the constant mix policy?
Section A (1 Mark)
Adjusted gross income is used in establishing limits on the following deductions, with the exception of
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)
If a portfolio manager has a good ability to forecast overall market but a poor ability to select undervalued securities, the following strategy would suit best to him.
Section A (1 Mark)
An example of ________ is that a person may reject an investment when it is posed in terms of risk surrounding potential gains but may accept the same investment if it is posed in terms of risk surrounding potential losses.
Section C (4 Mark)
Mr. Rajesh Rawat deposits Rs. 15,000 per month at the end of the month for 6.50 years in an account that pays a ROI of 8.80% per annum compounded quarterly. What will be the amount in the account after 6.50 years?
Section A (1 Mark)
In order to have confirmation of a major market trend under the Dow Theory, the
Section A (1 Mark)
Mr. Sharma invested Rs. 2,00,000 in an investment that gives Rs 40,000/- for the first 4 years, and Rs. 60,000/- for next 3 years. If the discount rate is 12 %, calculate the Present Value of these cash flows?
Section A (1 Mark)
An aggressive asset allocation would contain larger proportions of __________ than a conservative allocation.
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 C (4 Mark)
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
Section C (4 Mark)
Consider the following information for three mutual funds
Risk free return is 7%. Calculate Treynor measure?
Section B (2 Mark)
A constant proportion portfolio insurance (CPPI) policy calls for:
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 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 C (4 Mark)
A firm has a P/E ratio of 12 and a ROE of 13% and a market to book value of __________.
Section B (2 Mark)
A client has a minor child she is concerned about what might happen if she was to die while the child was still young and unable to sensibly handle a sizeable in heritance one solution could be to draft her will so that the child receives the asset once reaching age 21 this is an example of
Section A (1 Mark)
A 5 year ordinary annuity has a future value of Rs. 1,00,000/-. If ROI is 8 % per annum, then how much will be the amount of each payment ?
Section A (1 Mark)
If the economy were going into a recession, an attractive industry to invest in would be the ________ industry.
Section B (2 Mark)
Reproduction cost has been estimated as Rs 350,000 for a property with a 70-year economic life. The current effective age of the property is 15 years. The value of the land is estimated to be Rs 55,000. What is the estimated market value of the property using the cost approach, assuming no external or functional obsolescence?
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)
NCH Corporation, which markets cleaning chemicals, insecticides and other products, paid dividends of Rs2.00 per share in 1993 on earnings of Rs4.00 per share. The book value of equity per share was Rs40.00, and earnings are expected to grow 6% a year in the long term. The stock has a beta of 0.85, and sells for Rs60 per share. (The treasury bond rate is 7%.)
Based upon these inputs, estimate the price/book value ratio for NCH and How much would the return on equity have to increase to justify the price/book value ratio at which NCH sells for currently?
Section B (2 Mark)
To pay for new equipment with a cash price of Rs7500, you need to borrow at 5.3% compounded monthly, then make monthly payments for 32 months. How much less would your payments be if you were able to save Rs2100 as a down payment before you purchase the new equipment?
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 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 A (1 Mark)
A bank is considering making a loan to Neil Garg. Neil has bounced three cheques in the last year and already has Rs 1,00,000 on a credit card and an automobile loan with a large balance. What aspect of evaluating a consumer loan application is this fact concerned with?
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 C (4 Mark)
Sunil has an investment portfolio of Rs.100000; the initial portfolio mix is Rs.50000 in stocks, Rs.30000 bonds and Rs.20000 in bank. If market goes up by 10% and the value of bonds decreases by 10%, what should Sunil do under the constant mix policy?
Section A (1 Mark)
Which of the following is not an essential element of a trust?
Section C (4 Mark)
As a CWM you are required to calculate the tax liability of an individual whose taxable income is:
• $92120 in SGD and he is a Singapore citizen
• £ 57482p.a (only Savings Income) and he is a UK citizen
Section A (1 Mark)
Total current assets of a company are Rs.960 lakh while the current liabilities (other than bank borrowings) are Rs.300 lakh. If the company borrowed Rs.350 lakh, what will be the amounts of Maximum Permissible Bank Finance (MPBF) under the (method I) of the Tandon committee recommendations?
Section A (1 Mark)
An appealing feature of options on futures contracts is that:
Section B (2 Mark)
___________, the net profit margin realized by the enterprise from an international transaction entered into with an associated enterprise is computed in relation to cost incurred or sales affected or assets employed or to be employed in the enterprise or having regard to any relevant base.
Section B (2 Mark)
Mr. A gifted debenture of Rs. 100000 to his wife. She received Rs. 10000 interest which she reinvests and earns Rs. 1000. This Rs. 1000 will be taxable in the hands of
Section A (1 Mark)
Which of the following income is not exempt under section 10-IT Act 1961?
Section A (1 Mark)
The eligibility Criteria for Personal Loans Salaried Individuals for Maximum Age of Applicant at Loan Maturity in case of personal loan is:
Section A (1 Mark)
The principle in real estate valuation which acknowledges limitation on growth in market value, not ably in the case of improvements is known as:
Section A (1 Mark)
In Working Capital Finance, what should be the minimum current ratio the borrower needs to ensure the compliance under the first method of lending.
Section A (1 Mark)
In Private Equity, the stage where the start-up company may starts generating profits in a quarter or so or be just at the point of breaking even is called_________________
Section B (2 Mark)
The ________________provides that where the total income of an enterprise is computed by the AO on the basis of the arm's length price as computed by him, the income of the other associated enterprise shall not be recomputed by reason of such determination of arm's length price in the case of the first mentioned enterprise, where the tax has been deducted or such tax was deductible, even if not actually deducted under the provision of chapter VIIB on the amount paid by the first enterprise to the other associate enterprise.
Section B (2 Mark)
In UK, which of the following types of income is not specifically exempt from income tax?
Section B (2 Mark)
Which of the following statements with respect to International Taxation Structure is/are correct?
Section B (2 Mark)
Manav wishes to calculate that if he wants to withdraw Rs. 2,000/- every Quarter at start of the month for 6 years, then how much amount is required to be in his account today. He wants to start this withdrawal immediately and ROI is 9 % per annum compounded quarterly.
Section B (2 Mark)
Which of the following statements regarding a buy and hold strategy are true?
Section B (2 Mark)
Under the Workmen Compensation Policy, when the employment injury results in death, the insurance company pays 40 % of the monthly wages of the deceased multiplied by the relevant factor or Rs. _________ whichever is more.
Section C (4 Mark)
Mr. Bhatia, aged 43 is practicing as a Doctor at Nasik. His wife Mrs. Bhatia is a social worker. They reside in a flat they own along with their daughter Neena aged 9. Mr. Bhatia’s elder sister is residing in Canada whom he has not met since last 5 years. His another elder sister resides in USA whom he has not met since last 8 years. Mr. Bhatia will continue active practice upto the age of 75. Looking at the history of his family life expectancies, Mr. Bhatia believes he would survive upto 85. His gross monthly income currently is Rs. 1, 45,000. Their monthly expenses are Rs. 25,000/-(including Personal expenses Rs. 5000) and they save about Rs. 35,000/- every month. Mr. Bhatia has total assets of Rs. 38.25 lacs and total outstanding liability for Medical Equipment and car of Rs. 12.45 lacs, which gives Mr. Bhatia net worth of Rs. 25.80 lacs estimated as on March 2008. His current investments are as follows:
Mr. Bhatia is a moderate risk taker and minimizes his tax through various schemes. He has a minimal exposure to equity instruments, as substantial portion of his investments is locked in Debt instruments. But he is aware of the fact that capital growth without investing in direct equity or equity mutual funds is difficult. In the current scenario, the economy is positive, with a growth of more than 9% and hence equity will yield excellent returns.
Objectives:
1.Mr. Bhatia and his wife would like to start saving for their daughter Neena’s educational needs. They require Rs. 1,00,000 at her age of 15, 2 lacs when she is 16, and 8 lacs when she is 18 and 25 lacs when she is 21.
2.To provide Rs. 50 lacs for Neena’s wedding at the age of 25.
3.To provide for vacations with the family to US & Canada, Middle East and Europe.
4.To provide a retirement corpus for a period of 10 years
5.Purchase a new car worth Rs. 15 lacs in nest 6 months.
6.To buy a property worth Rs. 1 crore nearby of RML hospital.
Section C (4 Mark)
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?
Section B (2 Mark)
The Wilson Corporation has the following relationships:
What is Wilson’s profit margin and debt ratio?
Section B (2 Mark)
How much should one deposit today in a bank account paying interest compounded quarterly if you wish to have Rs. 10000 at the end of 3 months, if the bank pays 5% annually?
Section C (4 Mark)
Puspinder Singh Ahluwalia took a housing loan on 1st. of June 2009 (EMI in arrear) of Rs. 50 lacs at a ROI of 10.75% p.a. compounded monthly for 12 years. He wants to know the deduction in taxable income he can claim u/s 24 of the IT act for the FY 2011 -12
Section B (2 Mark)
If two customers choose exactly the same package of certain service, but customer A calls for help weekly and customer B calls only twice a year, which is most valuable customer?
Section C (4 Mark)
Read the senario and answer to the question.
Mr. Bhatia thinks he would require 50 lacs in today’s terms for Neena’s wedding at 25 years of age. What amount he has to save at the end of every month for Neena’s wedding requirement with a 7% inflation rate and investment earning minimum 12% p.a.
Section B (2 Mark)
How much total interest is paid between the 5th and 11th payments inclusive on a loan that has monthly payments for 2 years and an original principal of Rs47 500? The loan rate is 6.6% compounded quarterly.
Section A (1 Mark)
Which of the following is not one a part of the primary stage in the Francis Buttle model?
Section A (1 Mark)
During “Financial Independence” life stage, typical asset allocation should be
Section A (1 Mark)
Which one of the above statements is/are not a important needs of clients in the context of relationship management:
Section C (4 Mark)
Which of the following firms is likely to have the same value from both models?
Section B (2 Mark)
Suppose that Chicken Express, Inc. has a ROA of 7% and pays a 6% coupon on its debt. Chicken Express has a capital structure that is 70% equity and 30% debt. Relative to a firm that is 100% equity-financed, Chicken Express’s Net Profit will be ________ and its ROE will be ________.
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)
Mr. Peter sells a Nifty Put option with a strike price of Rs. 4000 at a premium of Rs. 21.45 and buys a further OTM Nifty Put option with a strike price Rs. 3800 at a premium of Rs. 3.00 when the current Nifty is at 4191.10, with both options expiring on 31st July.
What would be the Net Payoff of the Strategy?
• If Nifty closes at 3800
• If Nifty closes at 4500
Section B (2 Mark)
Which of the following statements with respect to Transfer Pricing is/are correct?
Section B (2 Mark)
Which of the following statements concerning index funds and actively managed funds is true?
Section C (4 Mark)
You have collected the following information regarding Companies C and D:
The two companies have the same total assets.
The two companies have the same operating income (EBIT).
The two companies have the same tax rate.
Company C has a higher debt ratio and a higher interest expense than Company D.
Company C has a lower profit margin than Company D.
Based on this information, which of the following statements is most correct?
Section C (4 Mark)
Mr. Sushobhan Adhikari, 56 years old, employee of Mega India Ltd, receives the following salary and perquisites from his employer during the previous year 2007–08.
A rent-free furnished house in Patna (rent of unfurnished house paid by employer- Rs. 84,000, rent of furniture Rs. 18,000, free services of a gardener (salary-Rs. 4,000), free services of cook (salary-Rs. 3,600), free services of watchman (salary-Rs. 900). He owns a small house at Patna.
Mr. Adhikari makes the following payments and investments during the year:
Mr. Adhikari comes to Mr. Gupta, CWM®, in September-2008 for developing a wealth plan to fulfill his financial goals. Mr. Adhikari will retire on 31st December, 2008 after completing 28 years of service. He is expecting a growth of Rs. 1,500 in his basic pay in the last year of his employment. The company is expecting a 5% growth every year in its turnover. His daughter Pallavi has completed her education and his main liability is the amount he may have to spend for her marriage. On his retirement he is expected to receive following amount:
He also has also informed to the planner following his other assets and investments:
He has given his Kolkata Flat on 12,500 p.m. rent. Municipal value of the property is Rs. 1,45,000, fair rent is Rs. 1,60,000 and standard rent is 1,40,000. Municipal tax paid by him are as follows:
In July, 2008 rent is increased from Rs. 11,500 to Rs. 12,500 pm with effect from 01/04/2007. Due to some dispute rent was not received in 2007–08 but all arrears of rent till date are paid on July 1, 2008. Maximum eligible amount of PPF contribution deposited in March, 2008.
His actual expenses before retirement are Rs. 23,500 per month.
Main goals of Mr. Adhikari:
●To provide for his daughter’s marriage
●Ensuring that his family is protected financially in the event of any mishap
●Minimize tax burden
●Establish an investment portfolio that gives high returns over long term
Assumptions:
●Mr. Adhikari needs to provide for himself and his family till he is 75.
●Inflation rate after retirement to be 4%
●Monthly expenses after retirement will be 15% less than before retirement
After detailed discussion, Mr. Gupta, CWM®, has suggested a revision in the portfolio as below to be implemented from October, 2008.
Section C (4 Mark)
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 any-occupation definition of disability.
What actions should the Shankers consider in order to improve the quality of the insurance program described above?
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 Technical Services are:
Section A (1 Mark)
An activity is presumed to be a profit-making activity rather than a hobby if the
Section C (4 Mark)
Nifty is at 3200. Mr. XYZ expects large volatility in the Nifty irrespective of which direction the movement is, upwards or downwards. Mr. XYZ buys 2 ATM Nifty Call Options with a strike price of Rs. 3200 at a premium of Rs. 97.90 each, sells 1 ITM Nifty Call Option with a strike price of Rs. 3100 at a premium of Rs. 141.55 and sells 1 OTM Nifty Call Option with a strike price of Rs. 3300 at a premium of Rs. 64.
What would be the Net Payoff of the Strategy?
• If Nifty closes at 2929
• If Nifty closes at 4325
Section A (1 Mark)
Unabsorbed depreciation can be carried forward for ____________.
Section C (4 Mark)
As a CWM you are required to calculate the tax liability of an individual whose Taxable income is:
• $ 1,22,300 in US dollars and he is a US citizen (Heads of the households)
• $ 310000 in SGD and he is a citizen of Singapore
Section B (2 Mark)
The estimated Net Operating Income of an office building is Rs. 12000 per year. An appraiser decide the appropriate capitalization rate is 12% comprised of 10% return on investment and 2% for depreciation, what is the estimated value of the building?
Section C (4 Mark)
A trader buys three-month put options on 1 unit of gold with a strike of Rs.17000/10 gms at a premium of Rs.70. Unit of trading is 1kg. On the day of expiration, the spot price of gold is Rs.16800/10 gms. What is his net payoff?
Section B (2 Mark)
Suppose the price of a share of CAS stock is Rs500. An April call option on CAS stock has a premium of Rs5 and an exercise price of Rs500. Ignoring commissions, the holder of the call option will earn a profit if the price of the share
Section C (4 Mark)
Read the senario and answer to the question.
Which one of the following statements most accurately describes the risk exposure of the Shankers’ portfolio?
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 C (4 Mark)
Suppose you have a two-security portfolio containing Bonds A and B. The market value of Bond A is Rs. 6,000, and the market value of Bond B is Rs4,000. The duration of Bond A is 8.5, and the duration of Bond B is 4.0. Calculate the duration of the portfolio.
Section C (4 Mark)
Keshav and Deepti Gohlyan approached you a Chartered Wealth Manager for preparing a Wealth plan to achieve their financial goals. Keshav Gohlyan, aged 45 years, is working in Chennai in an MNC, at a managerial level. His wife Deepti, aged 42 years, is working in a Private Company and has a post-tax income of Rs. 4 lakh p.a. She is expected to retire at the age of 55 years. Keshav’s gross salary is likely to grow at 7% p.a. and Deepti's gross salary is likely to grow at 6% p.a. The couple has two children – daughter Yogita, aged 18 years, pursuing her Graduation in Economics, and son Navneet, aged 16 years, studying in 12th standard. Navneet intends to become a Doctor.
Keshav's monthly household expenses are Rs. 40,000 out of which Rs. 8,000 is of Keshav’s personal expenses, this excludes EMI on loans and Insurance premiums. Keshav has two siblings Keshav and his family stay with his mother. His father passed away due to severe heart attack on 15-Dec-2009, at the age of 75 years, leaving a house (Value on 15thDec 2009 Rs. 25 lakh) in which they are currently staying.
Keshav has a term insurance of Rs. 20 lakh (for 20 years); the term expires 5 years from now. Both are covered under Group Medical Insurance for Rs. 4 Lakh family floater each provided by their respective employers
Assets
The couple’s assets as on 31-3-2010 are;
1.Cash in Hand Rs. 10,000
2.Bank balance Rs. 50,000
3.Diversified Equity Mutual Fund units at market value Rs. 2.60 lakh
4.Equity Shares at market value Rs. 15.25 lakh
5.Debt oriented Mutual Fund units at market value Rs. 1.65 lakh
6.PPF A/c balance Rs. 4.25 lakh (Keshav), Rs. 3.15 lakh (Deepti), both maturing on1st April 2016
7.ELSS Mutual Fund units at market value Rs. 75,000
8.A separate house is in the joint name of Keshav and Deepti with 50% ownership of each. This house has two floors and is let out for rent of Rs. 8,000 p.m. each floor.
Present Market Value of this House is Rs. 70 Lakh1
9.Gold Ornaments at market value Rs. 6.35 lakh
10.Car at market value Rs. 2.60 lakh
11.300 Gold ETF units purchased on 17th Oct 2006 @ 983 per unit
12.National Saving Certificates invested amount Rs. 4 lakh
13.Money back insurance plan of 20 year term with sum assured of Rs. 5 Lakh2
14.Unit linked insurance plan of 10 years with sum assured of Rs. 5 lakh3
____________________
1.Keshav and Deepti had jointly taken a housing loan of Rs. 30 Lakh to purchase the house costing Rs. 37.50 Lakh on 1st April 2003. The pay an EMI of Rs. 16,349 each, EMI date being last day of the month. The loan is for 15 years at a fixed rate of interest of 10.25%p.a.
2.Annual premium of Rs. 23,750. Paid 16 annual premiums till date before due date. The policy provides 25% of basic sum assured to insured as survival benefit after 5th, 10th, 15thyears from the start of the policy.
3.Annual premium of Rs. 35,000 p.a.
Liabilities
Housing loan outstanding: Rs. 21.36 Lakh
Goals & Aspirations:-
1.Plan for Navneet’s medical education expenses which is likely to be Rs. 3.50 lakh at theend of one year from now and increasing thereafter at 8%p.a. during the next 4years.
2.Plan for Yogita’s goal of Post-Graduation degree from abroad which is likely to cost Rs. 10 lakh in present terms required after three years.
3.Create a separate fund to provide every year post-retirement till his lifetime, vacation expenses amounting to Rs. 50,000 in current terms, such expenses increasing at the rate of 7% p.a.
4.To accumulate funds for marriage of Navneet and Yogita. For Navneet they will require in present terms Rs. 10 lakh when he attains 26 years and for Yogita he would require Rs. 15 lakh when she attains 25 years.
5.Build a retirement corpus for expenses in his post-retirement period at 75% of pre-retirement expenses at the retirement age of 60 years
Life Expectancy
Keshav: 80 years
Deepti: 78 years
Assumptions regarding long-term pre-tax returns on various asset classes:
1.Equity & Equity MF schemes/ Index ETFs11.00% p.a.
2.Balanced MF schemes9.00% p.a.
3.Bonds/Govt. Securities/Debt MF schemes7.00% p.a.
4.Liquid MF schemes5.50% p.a.
5.Gold & Gold ETF7.50% p.a.
Assumptions regarding economic factors:
1.Inflation: 5.50% p.a.
2.Expected return in Risk free instruments: 6.50% p.a.
3.Real Estate appreciation: 8.00% p.a
Cost Inflation Index
Section B (2 Mark)
An employee benefit plan can generally help in accomplishing all of the following items except:
Section C (4 Mark)
Mr. Dinesh constructs a BULL Call Spread Strategy with one Nifty Call Option having a Strike price of Rs. 4100 available at a premium of Rs. 170.45 and another Nifty Call option with a strike price Rs. 4400 at a premium of Rs. 35.40.
The Net Payoff of BULL Call Spread Strategy
• If Nifty closes at 4300
• If Nifty closes at 3700
Section A (1 Mark)
A relatively new type of credit derivative is a CDO which stands for ________________.
TESTED 24 Nov 2024
