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Section B (2 Mark)
Choose the amount of final tax liability of R for the assessment year 2007-08:
Section A (1 Mark)
A(n)_______________ is a credit-rating agency that keeps records of borrowers' loan payment histories.
Section B (2 Mark)
The following parameters are available for two mutual funds:
Calculate Treynor’s performance index for Fund A & Fund B respectively
Section B (2 Mark)
A perspective on decision making based on the assumption that people typically show risk aversion; hence, when making decisions they view whatever losses may be involved as more painful than equivalent gains are desirable. We have an irrational tendency to be less willing to gamble with profits than with losses.
Section A (1 Mark)
Holistic advisory services which cater to specific client segments such as entrepreneurs, professionals are known as_______________.
Section A (1 Mark)
Every employer is obliged to ensure that his employees get a safe and secure workplace. In relation to the risks arising in the workplace which affects the employees, cover is provided through
Section B (2 Mark)
The basic rate of income tax on non-savings incomein UK for tax year in 2011-12 is:
Section A (1 Mark)
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 B (2 Mark)
Which of the Following are the Negative Effects of Sample-Size neglect for investors
Section C (4 Mark)
A share pays nil dividend and its current market price is Rs.100. The possible selling prices at the end of a year and the probabilities are:
What is the expected rate of return at the end of the year?
Section B (2 Mark)
You write one XYZ February 50 put for a premium of Rs5. Ignoring transactions costs, what is the breakeven price of this position?
Section B (2 Mark)
Consider these two investment strategies:
Strategy ___ is the dominant strategy because __________.
Section A (1 Mark)
_______________ and _______________ mandates are two kinds of service level contracts
Section A (1 Mark)
The potential loss for a writer of a naked call option on a stock is
Section B (2 Mark)
Property A provides an annual income of Rs. 160,000 and a similar property B has sold based on 8 % capitalization rates. Calculate the value at which property A can be priced.
Section A (1 Mark)
Financial Gerontology tries to assess client needs based on __________
Section A (1 Mark)
The life-cycle theory of asset allocation proposes that as investors progress through life, their
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 C (4 Mark)
An investor Mr. Dayal, executes a Long Strangle by buying a Rs. 4300 Nifty Put for a premium of Rs. 23 and a Rs 4700Nifty Call for Rs 43. The Nifty is at 4500
The Net Payoff of Long Strangle
• If Nifty closes at 4100
• If Nifty closes at 5300
Section B (2 Mark)
Which of the following Biases are exhibited by Passive Preserver?
Section A (1 Mark)
The steps to establishing an investment policy are to state the
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 A (1 Mark)
Which of the following is the fastest growing source of revenue for state and local governments in US?
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)
Omax Inc. one of the largest developer of residential projects, reported earnings per share of Rs 8.0 in 2003, and paid dividends per share of Rs 4.8 in that year. The firm is expected to report earnings growth of 25% in 2004, after which the growth rate is expected to decline linearly over the following six years to 7% in 2009. The stock is expected to have a beta of 0.85 and current risk free rate is 6.25%.
Estimate the value of the firm using the H Model.
Section C (4 Mark)
Suppose Sunil visits his favorite coffee shop and encounters his good friend Rohit. Rohit raves about his stockbroker, whose firm employs an analyst who appears to have made many recent successful stock picks. The conversation goes something like this:
SUNIL: Hi, Rohit, how are you?
ROHIT: Hi, Sunil. I’m doing great! I’ve been doing superbly in the market recently.
SUNIL: Really? What’s your secret?
ROHIT: Well, my broker has passed along some great picks made by an analyst at her firm.
SUNIL: Wow, how many of these tips have you gotten?
ROHIT: My broker gave me three great stock picks over the past month or so. Each stock is up now, by over 10 percent.
SUNIL: That’s a great record. My broker seems to give me one bad pick for every good one. It sounds like I need to talk to your broker; she has a much better record!
Which of the following biases have been exhibited by Gaurav?
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 A (1 Mark)
Rahul deposits Rs. 30,000/- per year, at the end of the year, into an account for 30 years. What amount would be accumulated in that account at the end of 30 years if ROI is 9 % per annum?
Section A (1 Mark)
______________are bonds issued by governments that pledge their "full faith and credit," including tax revenues, to repayment in US.
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 B (2 Mark)
From the following data calculate the covariance between stock A and stock B
Section A (1 Mark)
Pure premium and Loss Ratio methods are two methods to determine
Section A (1 Mark)
An investor will take as large a position as possible when an equilibrium price relationship is violated. This is an example of _________.
Section A (1 Mark)
A dividend paid by a company which is a resident of India to a resident of the United Kingdom may also be taxed in India but the Indian tax so charged shall not exceed __________per cent of the gross amount of the dividend.
Section A (1 Mark)
Which of the following is not true about traditional defined benefit plans?
Section C (4 Mark)
As a CWM you are required to calculate the tax liability of an individual whose taxable income is:
• $ 83560 in SGD and he is a Singapore citizen
• £ 73150p.a (only employment) and he is a UK citizen
Section A (1 Mark)
A ____________________ tax system places a relatively large tax burden on upper-income people and a relatively small tax burden on lower-income people.
Section C (4 Mark)
Ms. Sonali Briganza is 22 years old. She is currently earning a salary of Rs.5,00,000/- per annum and saves 20% of her salary every year. If her salary increases by 10% every year and she is able to get a return of 11% p.a. compounded annually throughout her investment horizon what would be the corpus of funds available at her age 58.
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)
The current market price of a share of MOD stock is Rs15. If a put option on this stock has a strike price of Rs20, the put
Section A (1 Mark)
Guarantees covering security deposit/earnest money/advance payment/ mobilization advance etc. would come under__________________ category
Section A (1 Mark)
Essential requirement for the person who can attest the will is that he
Section B (2 Mark)
The arbitrage pricing theory (APT) and the CAPM both assume all except which of the following?
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 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 B (2 Mark)
Withholding Tax Rates for payments made to Non-Residents are determined by the Finance Act passed by the Parliament for various years. The current rates for Interest are:
Section A (1 Mark)
The concept of indemnity is based on the key principle that policyholders should be prevented from
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 A (1 Mark)
A draft of a will prepared by the head of the family which will decide the nature in which his properties will be distrubuted among his heirs is known as_____________________.
Section C (4 Mark)
Ms. Nimita Shah, aged 34 years as on 2nd April 2010, is Vice President in a Mumbai-based firm. She has twin daughters Revati and Savitri of age 12 years and she is the sole guardian of her children pursuant to her recent divorce. She is currently residing in a rented house. Both her daughter are studying in the 6th Standard. She has approached you, a CWM®, for preparing her Wealth plan. She has shared the following financial information with you:
You, in consultation with Nimita have crystallized the following financial goals for her family and the preliminary roadmap to achieve them:
1.Send both daughters to a Boarding school – immediately – Outlay Rs. 1.80 lakh (present cost) per child p.a. – for 6 years – To be met on year to year basis by investing a suitable corpus.
2.Buy a house–in the next three years – Outlay of Rs. 80 lakh – Take a loan for 15 year term.
3.Invest suitably for the Higher Education of both children – Higher Education starts after 6 years – present cost Rs. 4.5 lakh p.a. for each child for a team of 5 year.
4.To invest monthly for Revati and Savtri’s wedding when they complete 24 years of age. The estimated present cost of one such marriage is Rs. 15 Lakh
5.Retirement Corpus for self – Corpus to be accumulated in 21 years – Corpus to sustain an annuity of Rs. 1.25 lakh p.m. (current cost) inflation linked for a post – retirement life of 25 years.
6.A world tour with both of her kids – After 11 years – outlay of Rs. 8 lakh at current prices.
7.A suitable Estate Planning to cover all her physical and financial assets.
Assumptions:
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)
On 1st January 2011, Mr. Dutt took a personal loan of Rs.1,00,000/- for a period of 3 years at an 21% rate of interest. The loan is to be on monthly EMI on monthly reducing balance method.
What about be interest and principal amount to be paid in October 2013?
Section C (4 Mark)
The current dividend on an equity share of Bharat Limited is Rs.8.00 on earnings per share of Rs. 30.00. Assume that the dividend per share will grow at the rate of 20 percent per year for the next 5 years. Thereafter, the growth rate is expected to fall and stabilize at 12 percent. Investors require a return of 15 percent from Bharat’s equity shares. What is the intrinsic value of Bharat’s equity share?
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 A (1 Mark)
Single men trade far more often than women. This is due to greater ________ among men.
Section C (4 Mark)
Mr. Raman Gehlot, aged 55 years, is owner of midsized business firm. His family consists of his wife Anupama, aged 55, son Nishant aged 29 and daughter Nivedita aged 27. His wife is a housewife and social worker. Both of their children are happily married and well settled. The couple anticipates their life expectancy to be 75 years each.
The gross annual income of Raman for the previous year 2010–11 is expected to be Rs. 9,60,000. The couples’ household expenses are estimated to be Rs. 4,90,000 p.a. Taking into account incidental expenses of another Rs. 85,000 the net expenses of the family are estimated to be Rs. 5,75,000 for the previous year 2010–11. Thus they achieved a net surplus of Rs. 3,85,000 during the year. Raman has a net saving of Rs. 12,00,000 which he would like to invest for his post retirement purposes at the beginning of the year.
Currently Raman has approximately 5 years left for retirement and thus he is not very aggressive in his investments. The returns of his portfolio based on asset allocation during the accumulation and distribution phase are calculated as below:
Section A (1 Mark)
Manish started investing in a savings scheme by depositing Rs. 30,000/-. He plans to increase his contribution every year by Rs. 2,000/-. If rate of interest offered in this scheme is 8 % per annum calculate the amount Manish will get on maturity of this scheme after 15 years?
Section 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)
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 B (2 Mark)
You may need to file your Returns in India under the following circumstances:
Section B (2 Mark)
A property has 120 rooms and each room has a monthly rent of Rs.750. The occupancy rate throughout the year is 80% and maintenance expenses per year works out to be Rs.3,00,000. Capitalization rate is 12%. Calculate the value of the property.
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 A (1 Mark)
Which of the following is a special human trait that we need to sharpen and use very often in CRM?
Section A (1 Mark)
To ensure compliance under this method of lending, the current ratio of the concern should not be less that _________
Section B (2 Mark)
A financial institution plans to issue a group of bonds backed by a pool of automobile loans. However, they fear that the default rate on the automobile loans will rise well above 4 percent of the portfolio – the projected default rate. The financial institution wants to lower the interest payments if the loan default rate rises too high. Which type of credit derivative contract would you most recommend for this situation?
Section A (1 Mark)
In hedge funds the risk of no standard platform for measurement and no standard format for reporting is called __________________
Section C (4 Mark)
Suppose Gaurav, an investor, is looking to add to his portfolio and hears about a potential investment through a friend, Hitesh, at a local coffee shop. The conversation goes something like this:
GAURAV: Hi, Hitesh. My portfolio is really suffering right now. I could use a good long-term investment. Any ideas?
HITESH: Well, Gaurav, did you hear about the new IPO [initial public offering] pharmaceutical company called Pharma Growth (PG) that came out last week? PG is a hot new company that should be a great investment. Its president and CEO was a mover and shaker at an Internet company that did great during the tech boom, and she has Pharma Growth growing by leaps and bounds.
GAURAV: No, I didn’t hear about it. Tell me more.
HITESH: Well, the company markets a generic drug sold over the Internet for people with a stomach condition that millions of people have. PG offers online advice on digestion and stomach health, and several Wall Street firms have issued “buy” ratings on the stock.
GAURAV: Wow, sounds like a great investment!
HITESH: Well, I bought some. I think it could do great.
GAURAV: I’ll buy some, too.
Gaurav proceeds to pull out his cell phone, call his broker, and place an order for 100 shares of PG.
Which of the following biases have been exhibited by Gaurav?
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 C (4 Mark)
Read the senario and answer to the question.
As a CWM® which option would you recommend from the following to Neeraj and Kapil so that their tax liability is minimum if they invest in the debt based scheme
Section A (1 Mark)
Operational customer relationship management supports which of the following function?
Section A (1 Mark)
Ratio of loading charge over the gross rate is called _________
Section B (2 Mark)
Dharampal has let out his house property at monthly rate of Rs. 12000. He has paid Rs.3500 as annual municipal tax. He wants to know the Net Annual value of his house at Bhuj for AY 2011-12. The Municipal value of the house is Rs. 90,000, Fair rent Rs. 1,40,000, Standard rent Rs. 1,20,000. The house was vacant for one month during the previous year 2010-11 and the rent has not changed since then.
Section A (1 Mark)
Conservative retirees likely have ____ than they did early in their careers.
Section B (2 Mark)
As per Double Taxation Avoidance Agreement, the Dividends in UAE is charged at:
Section B (2 Mark)
Fiscal policy generally has a _______ direct impact than monetary policy on the economy, and the formulation and implementation of fiscal policy is ______ than that of monetary policy.
Section C (4 Mark)
Suppose ABC Ltd. is trading at Rs. 4457 in June. An investor Mr. A buys a Rs 4500 call for Rs. 100 while shorting the stock at Rs. 4457. The net credit to the investor is Rs. 4357
What would be the Net Payoff of the Strategy?
• If ABC Ltd closes at 4145
• If ABC Ltd closes at 4983
Section A (1 Mark)
In US Over one-half the money spent by state and local governments goes to just three services. Which of the following is not one of these services?
Section C (4 Mark)
Mudra Financial is a large financial firm which owns several mutual funds. The funds are managed individually by portfolio managers but it has an investment committee that overseas all of the funds. This committee is responsible for evaluating the performance of the funds relative to the appropriate benchmark and relative to stated investment objectives of each individual fund. During a recent investment committee meeting, the poor performance of Its Equity Funds were discussed. In particular, the inability of the portfolio managers to outperform their benchmarks was highlighted. The net conclusion of the committee was to review the performance of the manager responsible for each fund and dismiss those managers whose performance had lagged substantially behind the appropriate benchmark.
The fund with the worst relative performance is the Mudra Large Cap Fund which invests in large cap stocks. A review of the operations of the fund found the following:
• The turnover of the fund was almost double that of other similar style mutual funds
• The fund’s portfolio manager solicited input from her entire staff prior to making any decision to sell an existing holding
• The beta of the Mudra Large Cap Fund’s portfolio was 65% higher than the beta of other similar style mutual funds
• The portfolio manager refuses to increase the Capital Goods sector weighting because of past losses the fund incurred in the sector
• The portfolio manager sold all the fund’s Oil Marketing Companies stocks as the price per barrel of oil rose above $105. He expects oil prices to fall back to the $80 to $85 per barrel
• No stock is considered for purchase in the Large Cap Fund unless the portfolio manager has 10 years of financial information on that company.
The underweighting of the Capital Goods sector and selling off Oil Marketing Stocks could be best described as an example of:
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 B (2 Mark)
Accrued Interest on loan for self occupied property is Rs.110000 till 31 March 2010. Loan was taken for construction on 31/07/2006 and construction completed on 03/04/10. Interest for the year 2010-11 is Rs 22000. Determine what interest shall be allowed u/s 24(b) for AY 2011-12.
Section C (4 Mark)
Nifty is presently at 2694. Mr. XYZ expects Nifty to fall. He buys one Nifty ITM Put with a strike price Rs. 2800 at a premium of Rs. 132 and sells one Nifty OTM Put with strike price Rs. 2600 at a premium Rs. 52.
What would be the Net Payoff of the Strategy?
• If Nifty closes at 2359
• If Nifty closes at 3561
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)
Ramesh has invested Rs 3,000/- in Reliance Growth Fund two years ago and its worth is now 4,000/-. Ram has received dividend Rs.300 at the end of two years. Calculate Compounded annual growth rate (CAGR) of Ram’s investment.
Section A (1 Mark)
Convertible bond arbitrage is to event driven as _________ is to corporate restructuring.
Section C (4 Mark)
Shikha has an investment portfolio of Rs.100000, a floor of Rs.75000, and a multiplier of 2. So the initial portfolio mix is 50000 in stocks and 50000 in bonds. If stock market goes up by 20%, what should Shikha do?
Section B (2 Mark)
Rakhi purchased a piece of land on 25-4-1979 for Rs.80000. This land was sold by him on 23-12-2011 for Rs.1250000. The market value of the land as on 1-4-1981 was Rs.98000. Expenses on transfer were 1.5% of the sale price. Compute the capital gain for the assessment year 2012-13. [CII-12-13: 852,11-12: 785,10-11:711]
Section B (2 Mark)
Which of the following statements with respect to International Taxation Structure is/are correct?
Section B (2 Mark)
The equity risk premium for the market is 8 percent. Jackson Products has a beta of 0.4. The real risk-free rate is 2 percent and the expected inflation premium is 5 percent. The required rate of return for Jackson is __________ percent.
Section A (1 Mark)
Which of the following is true regarding the resistance level?
Section A (1 Mark)
Which portion of his property can a muslim normally be guest according to muslim personal law?
Section A (1 Mark)
A type of lease where there is no payment schedule and penalty for a set period of lines.
Section B (2 Mark)
Markets would be inefficient if irrational investors __________ and actions of arbitragers were __________.
Section A (1 Mark)
If a testator makes a will ‘to induce another person to make him comply with his (testators) wish’ but does not have any testamentary operation or intention, then this will is called as
Section A (1 Mark)
The way to reduce tax liability by taking full advantage provided by the Act is
Section B (2 Mark)
Which of the following statements with respect to DTAA is/are correct?
Section A (1 Mark)
One aspect of the tax considerations in asset allocation is that
Section A (1 Mark)
Debt Equity Ratio is 3:1,the amount of total assets Rs.20 lac, current ratio is 1.5:1 and owned funds Rs.3 lac. What is the amount of current asset?
Section B (2 Mark)
You have Rs. 5 Lacs available to invest. The risk free rate as well as the borrowing rate is 8%. The return on the risky portfolio is 16%. If you wish to earn 22% return, you should:
Section A (1 Mark)
An investor will take as large a position as possible when an equilibrium price relationship is violated. This is an example of _________.
Section A (1 Mark)
The covariance of the market returns with the stocks returns is 0.007. The standard deviation of the market is 7% and standard deviation of stock’s return is 10%. What is the correlation coefficient between stocks and market returns?
Section A (1 Mark)
As per Hindu succession Act 1956 following person is not considered as a class I heir of the person who dies intestate
Section A (1 Mark)
The price that the buyer of a call option pays for the underlying asset if she executes her option is called the
Section B (2 Mark)
Reliable ltd. has current earnings per share of Rs. 5. Assume a dividend – payout ratio of 50 percent. Earnings grow at a rate of 9 percent per year. If the required rate of return is 14 percent, what is its current value?
Section C (4 Mark)
Mr. Jogen 57 years and 8 months old and going to retire after few months at the age of 58 years (after completing 33 years and 9months of service) is working as an assistant secretary in petroleum ministry. He is interested in making investments in Equity Market. Jogen purchased 100 shares of SBI Ltd. for Rs. 1,250/- per share at the beginning of the current financial year. It paid dividends of Rs. 20 per share over the year (February-08) and he sold the stock for Rs. 1,975 at the end of the year. His two children are well settled. He is staying in his own flat and has paid last installment of loan. He gets a salary of Rs. 48,000 p.m. After retirement he will get a pension of Rs. 16,000 p.m. His present (October -2007) household expenses per month are Rs. 22,000 and want to maintain same standard of living. His post-retirement expenses will be 95% of his last month’s expenses at retirement.
The present values of his physical assets are as below:
His financial assets are as follows:
He will get following amounts on his retirement:
Section A (1 Mark)
The effect on a bond portfolio’s value of a decrease in yield would be most accurately estimated by using:
Section C (4 Mark)
Read the senario and answer to the question.
For the purpose of World Tour Nimita has an option to use her investments in PPF A/c. She would contribute maximum permissible amount on the 1st working day of April every year till its due maturity as well as in all years of the extension of account for a 5-year term after its due maturity. She wants to use half of the PPF account proceeds for the proposed world tour. You estimate the adequacy of such amount, the same is _____________.
Section A (1 Mark)
Why is the price/yield profile of a callable bond less convex than that of an otherwise identical option-free bond? The price:
Section A (1 Mark)
If a certain stock has a beta greater than 1.0, it means that
Section C (4 Mark)
Mr. A bought XYZ Ltd. For Rs. 3850 and simultaneously sells a call option at an strike price of Rs. 4000. Which means Mr. A does not think that the price of XYZ Ltd. will rise above Rs. 4000. However, incase it rises above Rs. 4000, Mr. A does not mind getting exercised at that price and exiting the stock at Rs. 4000 (Target Sell Price = 3.90% return on the stock purchase price). Mr. A receives a premium of Rs. 80 for selling the call. Thus net outflow to Mr. A is (Rs. 3850 – Rs. 80) = Rs. 3770. He reduces the cost of buying the stock by this strategy.
What would be the Net Payoff of the Strategy?
• If XYZ closes at 3350
• If XYZ closes at 4800
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)
Which of the following statements is TRUE concerning zero coupon bonds?
Section A (1 Mark)
Your client Mr. Singhania expressed his intention to write his will in his own handwriting such a will which is wholly in the handwriting of the testator is renown as:
Section C (4 Mark)
The Puri’s family includes a financially well-informed couple, both aged 34, and two children aged 4 and 6. They are financially sound, but were not in the market during the Indian Bull market of the 2003 to 2007 as many of their neighbors were. The couple’s total income, Rs. 12,00,000, which they do not expect to grow significantly in times to come
They have saved 15,00,000, which they hope will be the financial foundation from which they will send their children to college and retire comfortably.
Which of the following biases does the Puri Family suffer from:?
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)
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 A (1 Mark)
A company making an IPO can avail which of the following option?
Section B (2 Mark)
An assessee was allowed deduction of unrealized rent to the extent of Rs. 40,000 in the past although the total unrealized rent was Rs. 60,000. He is able to recover from the tenant Rs.45,000 during the previous year on account of such unrealized rent. He shall be liable to tax to the extent of:
Section A (1 Mark)
Dividend received by a shareholder from an Indian company the whole of whose income is agricultural income shall be treated as:
Section B (2 Mark)
As per Double Taxation Avoidance Agreement, the Interest Rate in Mauritius is charged at:
Section A (1 Mark)
Which of the following could be classified as an emotional bias?
Section B (2 Mark)
A bond has a convexity of 57.3. The convexity effect if the yield decreases by 110 basis points is closest to:
Section A (1 Mark)
An aggressive asset allocation would contain larger proportions of __________ than a conservative allocation.
Section C (4 Mark)
Asit an industrialist wants to buy a car presently costing Rs. 10,00,000/- after 5 years. The cost of the car is expected to increase by 10% p.a for the first 3 years and by 6% in the remaining years. Asit wants to start a SIP with monthly contributions in HDFC Top 200 Mutual Fund. You as a CWM expect that the fund would give an average CAGR of 12% in the next 5 years. Please advise Asit the monthly SIP amount starting at the beginning of every month for the next 5 years to fulfill his goal of buying the Car he desires.
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 B (2 Mark)
As per Double Taxation Avoidance Agreement, the Royalties in UAE is charged at:
Section A (1 Mark)
The eligibility Criteria for Self Employed Professionals & Businessman for minimum age of the applicant in case of personal loan is:
Section A (1 Mark)
Which of the following are the advantages of a Credit Union:
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 A (1 Mark)
The proposed Fair Tax would change the U.S. tax system and instead:
Section A (1 Mark)
Rapid accumulation stage suggests that the net worth is ________
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 B (2 Mark)
Which of the following statements are correct with regard to Bailard, Biehl, and Kaiser Five-Way Model?
Section A (1 Mark)
A good customer relationship management program will allow a business to:
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 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 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 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 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 B (2 Mark)
Conventional theories presume that investors ____________ and behavioral finance presumes that they ____________.
Section B (2 Mark)
What is the projected sale price of an apartment building that produces an annual net cash flow Rs. 120,000, if we set a projected capitalization rate at 7%?
Section A (1 Mark)
A relatively new type of credit derivative is a CDO which stands for ________________.
Section A (1 Mark)
Which of the following is an effective strategy in times of falling interest rates?
Section A (1 Mark)
Wages for the purpose of gratuity payment as per the Act means
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 B (2 Mark)
____________ are good examples of the limits to arbitrage because they show that the law of one price is violated.
Section B (2 Mark)
Which of the following is an assumption of two stage dividend discount model?
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)
In the year to 31 March 2012, A Ltd (which is UK resident) made a UK trading profit of £100,000. The company's only other income consisted of rents received of £52,500 (net) from an investment property in Germany. These rents were received net of withholding tax of 25%. A Ltd has no associated companies.
The credit for double tax relief that will be given in the corporation tax computation for the year will be:
Section C (4 Mark)
Vinod has a investment portfolio of Rs. 100000, a floor of Rs. 75000, and a multiplier of 2. So the initial portfolio mix is 50000 in stocks and 50000 in bonds. If stock market falls by 20%, what should Vinod do assuming he is following a CPPI policy?
Section C (4 Mark)
A 14% semiannual-pay coupon bond has six years to maturity. The bond is currently trading at par. Using a 25 basis point change in yield, the effective duration of the bond is closest to:
Section C (4 Mark)
Mr. XYZ 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 3980.55
• If Nifty closes at 4800
Section A (1 Mark)
The cost which the Wealth management firms would generally not be able to fully absorb the revenue shock in the near future is known as Sticky Cost.
Section C (4 Mark)
Sajan Mathews, aged 29 years (as on 2nd April, 2010), is working with a Multi National Company since December 2004. He has approached you, a CWM® for preparing his wealth plan. He is staying in his own house at Ahmedabad. His wife Jennifer, aged 31 years, is a fashion designer. She has earned a net profit of Rs. 4 lakh in FY 2008-09. They have a son, Mark of age 4 years (born on 12.02.2006), and a daughter, Stephanie (born on of 23.09.2009). Sajan is also supporting his parents staying in their own house at Surat to whom he sends Rs. 10,000 p.m. His monthly house hold expenses are Rs. 30000 p.m. (excludes his investments, payment of premia and EMIs). Sajan normally gets 5% increase in his gross salary year-on-year in the beginning of every financial year, apart from bonus. The effect for this year is yet to take place, though he has received a bonus of Rs. 3,31,680 for the year 2009-10. He has taken a family floater policy for health insurance involving an annual premium of Rs. 16268 and a total cover of Rs. 15 lakh.
Current Assets & Liabilities of the Family (As on 31st March, 2010 unless otherwise specified in foot notes)
____________
1.Purchased on 25th October, 2006, annual premium paid Rs. 14,798
2.Purchased on Mark’s 2nd birthday for a term of 15 years; annual premium Rs. 41,374
3.Subscribed on 01.09.2008 @ 10% p.a., with interest credited quarterly to his savings account; renewed at same rate for one year on 01.09.2009 without penal provision for premature withdrawal
4.Home loan of Rs. 17 lakh taken on 1st November, 2004 at a fixed interest of 7.5% p.a. for a 15 year term.
5.Car loan of Rs. 4.50 lakh taken on 1st April, 2008 at a fixed interest of 11.25% p.a. for a 4-year term.
Goals:
1.To provide for higher education of Mark and Stephanie. Initial expenses at their respective age of 18 years, Rs. 3 lakh (current cost), and subsequently Rs. 2 lakh p.a. for the next two years, and Rs. 3.5 lakh p.a. for the following 2 years.
2.Marriage expenses of Rs. 15 lakh (current cost) for each child at their respective age of 27 years.
3.Retirement corpus at the age of 58 years to sustain 70% of pre-retirement household expenses till his lifetime and 50% till stephanie’s expected life.
4.A Bigger house valued at Rs. 50 lakh today, a year from now.
5.To build a separate fund for vacation expenses of Rs. 2 lakh (at current cost) every year 10 years from now so that the corpus so built is self-sustaining till the marriage of Stephanie.
Assumptions:
Regarding long-term pre-tax returns on various asset classes:
Regarding economic factors:
Section A (1 Mark)
Which of the following is an effective strategy in times of falling interest rates?
Section A (1 Mark)
Given below is the portfolio return; calculate the expected portfolio rate of return:
TESTED 25 Dec 2024
