Free AAFM CWM_LEVEL_2 Practice Exam with Questions & Answers | Set: 7

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 B (2 Mark)

Which of the following statement is/are correct?

Section A (1 Mark)

If you cosign a loan:

Section B (2 Mark)

As per Double Taxation Avoidance Agreement, the Technical Fees in UK is charged at:

Section A (1 Mark)

Short-term to medium-term loans repayable in two or more consecutive payments are known as:

Section A (1 Mark)

Mr. Roy is now 45 years old. He has invested Rs. 1,75,000/- in an annuity which will pay him after 10 years a certain amount p.a. at the end of every year for 10 years. Rate of interest is 7% p.a. compounded annually Calculate how much he will receive at the end of every year after 10 years?

Section A (1 Mark)

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

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 A (1 Mark)

The following is not a capital receipt

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)

Which of the following is classified as passive income in US?

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)

You are given the following set of data:

Historical Rate of Return

Determine the arithmetic average rates of return and standard deviation of returns of the NSE over the period given.

Section A (1 Mark)

As per presumptive income scheme under section 44AE, the presumed income shall be:

Section B (2 Mark)

Calculate the value at which an office building can be priced from the following information:

A similar building has 8% capitalization rate.

Section C (4 Mark)

Read the senario and answer to the question.

Compute Expanded Liquidity Ratio before his retirement as (beginning of October 2007) and find out for how many months of expenses, his liquid assets are sufficient enough to cover?

Section B (2 Mark)

The tracking error of an optimized portfolio can be expressed in terms of the ____________ of the portfolio and thus reveal ____________.

Section C (4 Mark)

The Meryl Corporation's common stock is currently selling at Rs100 per share, which represents a P/E ratio of 10. If the firm has 100 shares of common stock outstanding, a return on equity of 20 percent, and a debt ratio of 60 percent, what is its return on total assets (ROA)?

Section A (1 Mark)

In “Teenage Years” life stage, one learns about ___________

Section C (4 Mark)

In the year to 31 March 2012, a UK resident company receives overseas income of £9,000 (net) from which 10% tax has been deducted at source. The company's only other income is a UK trading profit of £80,000. There are no associated companies. What is the UK corporation tax liability for the year?

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 A (1 Mark)

Which one of the following statements is false?

Section A (1 Mark)

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

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 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 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 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)

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 C (4 Mark)

Read the senario and answer to the question.

Assuming that Mahesh owns a building which he insures along with its contents for Rs. 12 lakh. However the market value of the building and its content is Rs. 15 lakh. Assuming that the building along with its contents is partially destroyed by fire and the loss assessed of Rs. 1 lakh what is the amount of money insurance company would pay as claim reimbursement to Mahesh?

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 A (1 Mark)

A(n) _____________ is an assurance that investors will be repaid in the event of the default of the underlying loans in a securitization. These can be internal or external to the securitization process and lower the risk of the securities.

Section A (1 Mark)

Riskier stocks have

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 B (2 Mark)

Ashish is bullish about HLL which trades in the spot market at Rs.210. He buys 10 three-month call option contracts on HLL with a strike of 230 at a premium of Rs.1.05 per call. Three months later, HLL closes at Rs. 250. Assuming 1 contract = 100 shares, his profit on the position is ___________.

Section B (2 Mark)

Which one of the following statements is/are correct?

Section A (1 Mark)

Which of the following statements about the difference between the SML and the CML is/are TRUE?

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)

A bank is about to make a Rs50 million project loan to develop a new oil field and is worried that the petroleum engineer's estimates of the yield on the field are incorrect. The bank wants to protect itself in case the developer cannot repay the loan. Which type of credit derivative contract would you most recommend for this situation?

Section B (2 Mark)

Which one of the following statements is/are correct?

Section B (2 Mark)

The risk-free return is 9 percent and the expected return on a market portfolio is 12 percent. If the required return on a stock is 14 percent, what is its beta?

Section B (2 Mark)

The Wilson Corporation has the following relationships:

What is Wilson’s profit margin and debt ratio?

Section A (1 Mark)

In a life insurance contract, offer refers 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 3287

• If Nifty closes at 4925

Section A (1 Mark)

Premium under endowment plans equals

Section A (1 Mark)

The APT is based on the:

Section B (2 Mark)

A bank has a long term relationship with a particular business customer. However, recently the bank has become concerned because of a potential deterioration in the customer's income. In addition, regulators have expressed concerns about the bank's capital position. The business customer has asked for a renewal of its Rs25 million dollar loan with the bank. Which credit derivative can help this situation?

Section C (4 Mark)

Read the senario and answer to the question.

Saxena wants to know his income tax liability for FY 2007–08 without taking into consideration any interest income from NSC. Calculate the same including surcharge and Educational Cess.

Section A (1 Mark)

REITs offer all of these, except:

Section B (2 Mark)

Shiva Industries Ltd. earns Rs. 2 per share and distributes 40% of its earnings as cash dividends. Its dividends grew annually at 7%. What will be the stock’s price if the required rate is 10%?

Section A (1 Mark)

__________ is the symptom of poor listening.