AAFM CWM_LEVEL_2 - Chartered Wealth Manager (CWM) Certification Level II Examination
Section A (1 Mark)
Real estate investments can be categorized into:
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)
Mrs. Dikshit is a single, sixty-five year old with a modest lifestyle and no income beyond what her investment portfolio of Rs1,00,00,000 generates. Her primary investment goal is to not outlive her assets; she does not, under any circumstances, want to lose money because she recalls that her relatives lost money in the crash of 2000. Mrs. Dikshit exhibits these behavioral biases:
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 A (1 Mark)
If you cosign a loan:
Section B (2 Mark)
Which of the following portfolios falls below the Markowitz Efficient Frontier?
Section A (1 Mark)
An Agreement entered into between the Sellor and Buyer for transfer of the right / ownership of the property on an outright sale/purchase is known as __________.
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 A (1 Mark)
We prefer a sure gain from a much larger gain that is very likely but not certain. This makes us close winning positions even if we think that they are likely to get even better.
Section A (1 Mark)
For any given stock, which of the following must be true?
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)
Gift received is not taxable in hands of
Section A (1 Mark)
If the intrinsic value of a stock is greater than market value, which of the following is a reasonable conclusion?
Section C (4 Mark)
Read the senario and answer to the question.
Calculate the retirement corpus required by Raman to generate his post-retirement expenses.
Section 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)
Which of the following statements is / are correct?
Section C (4 Mark)
Today is 14th February 2008 Mr. Mehta is 29 years old and is salaried. His wife, Nisha is a housewife. He has started depositing Rs. 5,000 at the beginning of each year in an education fund for his new born child.
He is earning a monthly income of Rs. 53000. His expenses are Rs. 27000 p.m. He takes the help of a wealth manager to plan his investments. He has taken housing loan and outstanding amount is Rs. 1000000 and outstanding amount on car loan is Rs. 300000.He is paying an EMI of Rs. 9547 on housing loan and an EMI of Rs. 2600 on car loan at the end of each year.
His other investments are as follows:
Mr. Mehta has joined the services after completing his education five years back. But during the previous year he works for 230 days.
Assumptions
Section B (2 Mark)
What is the expected percentage price change for a bond with an effective duration of nine in response to an increase in yield of 30 basis points?
Section C (4 Mark)
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)
Ram is working in Rashid Enterprises, a proprietorship firm.During his working hours Ram was injured seriously. Due to this injury Ram was hospitalized for six months. Ram is the only bread winner of his family. Ms. Rashid, the proprietor of Rashid Enterprises is liable to pay damages to Ram. Under which of the following policy Rashid can protect himself from this liability?
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 A (1 Mark)
Aditya’s father has given him general power of attorney what does this mean?
Section A (1 Mark)
Which one of the following statements is untrue?
Section A (1 Mark)
Conclusions about technical analysis suggest that:
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)
Which of the following income is not exempt under section 10-IT Act 1961?
Section B (2 Mark)
Ram born in 1950 has a life expectancy at birth of 65 years. Sita his wife born in 1955 has a life expectancy at birth of 70 years. Assuming that the life expectancies have not changed. Ram is planning to buy an annuity to be paid to him or his wife till anyone of them is alive. Assuming Ram will retire on attaining age 58 i.e. in 2008, what should be the time period of the annuity?
Section A (1 Mark)
The core of the_________________ is that even though stocks appear to be an attractive asset – they have high average returns and a low covariance with consumption growth – investors appear very unwilling to hold them.
Section A (1 Mark)
A swap that involves the exchange of one set of interest payments for another set of interest payments is called a(n)
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)
Read the senario and answer to the question.
Portfolio A had a return of 12% in the previous year, while the market had an average return of 10%. The standard deviation of the portfolio was calculated to be 20%, while the standard deviation of the market was 15% over the same time period. If the correlation between the portfolio and the market is 0.8, what is the Beta of the portfolio A?
Section A (1 Mark)
If a certain stock has a beta greater than 1.0, it means that
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)
The quantum of deduction allowed u/s 80U is:
Section B (2 Mark)
In US, all states except _________________ require their state, via state constitutional or statutory requirements, to balance their budget.
Section B (2 Mark)
If Second National Bank has more rate-sensitive liabilities then rate-sensitive assets, it can reduce interest rate risk with a swap that requires Second National to
Section A (1 Mark)
The two components of EPS are
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)
Which of the following statement is/are true?
Section C (4 Mark)
The expected return and standard deviations of stock A & B are:
Amit buys Rs.20,000 of Stock A and sells short Rs.10,000 of Stock B using all the Proceeds to buy more or Stock A. The correlation Between the two securities is .35. What are the expected return & standard deviation of Amit’s portfolio?
Section B (2 Mark)
An approved superannuation fund must have a minimum of _______ trustees
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 C (4 Mark)
Read the senario and answer to the question.
In order to provide for Medical Education Expenses of Navneet he will be transferring whole of Equity share portfolio to Debt MF. And for Yogita’s PG degree he is ready to use his Equity MF portfolio. Balance to be met by SIP in equity MF. Starting from today. You are required to guide Keshav whether he will be able to meet Navneet’s Education Expand what is the surplus or deficit in Debt MF (today value). And what should be the SIP amount for Yogita’s Education goal?
Section C (4 Mark)
The expected return for the market is 12 percent, with a standard deviation of 20 percent. The expected risk-free rate is 8 percent. Information is available for three mutual funds, all assumed to be efficient, as follows:
Calculate the expected return on each of these portfolios respectively.
Section B (2 Mark)
For calculation of liability of payment of gratuity to an employee on leaving service, the wage to be taken into account is
Section A (1 Mark)
Book building is used to help in better
Section B (2 Mark)
A project should be considered if the Profitability Index is
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 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 B (2 Mark)
A January month Nifty Futures contract will expire on the last _____ of January
