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Section B (2 Mark)
Mr. Ram buys 100 calls on a stock with a strike of Rs.1,200. He pays a premium of Rs.50/call. A month later the stock trades in the market at Rs.1,300. Upon exercise he will receive __________.
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 A (1 Mark)
A(n)____________________________________________ is where the customer can use the difference between some percentage of the appraised value of their home and the mortgage remaining to secure a loan. This loan can be used to fund a college education, pay for a vacation or pay for home improvements.
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 A (1 Mark)
With the______________, the buyer gets no protection from encumbrances. This deed type has very specialized uses.
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 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)
In reality, when risk and uncertainty or incomplete information about an alternative or high degree of complexity is introduced, people or organizations may be have somewhat different from rationality. This is called ___________.
Section C (4 Mark)
Data on following mutual funds is given below:
Risk free return is 8%. Calculate Sharpe measure.
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 B (2 Mark)
Any income chargeable under the based “Salaries” is exempt from tax under Section 10(6)(viii), if it is received by any non resident individual as remuneration for services rendered in connection with his employment in a foreign ship where his total stay in India does not exceed a period days in that previous year.
Section B (2 Mark)
The current market price of a share of JVJ stock is Rs60. If a put option on this stock has a strike price of Rs55, the put
Section C (4 Mark)
Read the senario and answer to the question.
What is the Basic Liquidity Ratio for the couple? Is it sufficient considering Vinay’s circumstances?
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 B (2 Mark)
Total income of an individual including long-term capital gain of Rs. 50,000 is Rs. 1,10,000, the tax on total income shall be:
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 C (4 Mark)
Shekhar 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 stock market goes up by 10%, what should Shekhar do under the constant mix policy?
Section C (4 Mark)
Read the senario and answer to the question.
Raman is considering the purchase of a office building and, as part of his analysis, from the following given data calculate the appraised value of the property using the Income Approach?
Section B (2 Mark)
Buyers of call options __________ required to post margin deposits and sellers of put options __________ required to post margin deposits.
Section B (2 Mark)
Reliance Ltd. has issued a preferred stock that pays Rs.10 per share. The dividend is fixed and the stock has no expiration date. What is the intrinsic value of Reliance Ltd. stock, assuming a discount rate of 14%?
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 B (2 Mark)
Ms. Shalini Bhargav plans to purchase a property having a projected annual income for three year is Rs 20,000 with 12 percent expected return and expect to sell it at the end of three years for Rs 2,70,000. Compute the present value of the property.
Section A (1 Mark)
A(n) _________________________ guarantees the swap parties a specific rate of return on their credit asset. Bank A may agree to pay the total return on the loan to Bank B plus any appreciation in the market value of the loan. In return Bank A will often get LIBOR plus a fixed spread plus any depreciation in the value of the loan.
Section B (2 Mark)
Which of the following two outcomes is an example of Status Quo Bias:
Section A (1 Mark)
A general theoretical perspective in social psychology concerned with the issue of social perception. is known as_____________
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)
The potential loss for a writer of a naked call option on a stock is
Section A (1 Mark)
At the time of renewal of working capital limits by a bank, the loan officer observed that M/s ABC’s utilisation of funds on a long term basis is 80% of the long term sources during the year. Which among the following would be the result of this kind of financial management?
Section A (1 Mark)
All of the following are assumptions made by technical analysts except:
Section A (1 Mark)
___________CRM automates and improves customer-facing and customer supporting business processes
Section C (4 Mark)
Read the senario and answer to the question.
If Saxena’s debentures have a balance maturity period of 15 years &the coupons are payable annually, what should be the market valuation of these debentures, if risk free interest rate is taken as the required IRR?
Section A (1 Mark)
Mr. Dhir is now 50 years old. He has invested Rs. 1,50,000/- in an annuity which will pay him after 10 years a certain amount p.a. at the beginning of every year for 10 years. Rate of interest is 7% p.a. Calculate how much he will receive at the beginning of every year after 10 years?
Section A (1 Mark)
The difference between the cash price and the futures price on the same asset or commodity is known as the
Section B (2 Mark)
For calculation of liability of payment of gratuity to an employee on leaving service, the wage to be taken into account is
Section C (4 Mark)
Harish Rawat has approached you on 26th Nov 2010, a Chartered Wealth Manager, for preparing a comprehensive Wealth plan to accomplish his financial goals. From your initial meeting, you have gathered the following information:
Harish Rawat, aged 44 years with life expectancy 70 years, is self-employed in Dehradun. Harish’s wife Sonali, aged 41 years with life expectancy 72 years, is working as a Assistant Manager in a Telecom
Company and is having a post-tax income of Rs. 4 lakh p.a. She is expected to retire at the age of 55 years. The couple has two children Chirag, aged 16 years and Vishesh, aged 10 years. Chirag is studying in 10th standard while Vishesh is studying in 4th standard. Harish’s net annual Income from retail medical store is Rs. 8 Lakh and their monthly household/living expenses, excluding housing loan EMI, are Rs. 32,500.
Harish is a Graduate. He earlier served in a pharmaceutical company as a medical representative for approx. 10 years. After separation from the company, he started his own wholesale business of medicines but could not sustain for long due to lack of working capital. He shut down his operations after 3.5 years. Thereafter he got a contract for retail medical shop in the premises of a nursing home. The terms of the contact are profit sharing in the ratio 50:50. Investment in stock and handling all activities of medical store are of Harish and no rent is charged by the owner of nursing home.
Harish had taken a housing loan of Rs. 15 Lakh disbursed on 1st April 2005. They are presently paying an EMI of Rs. 17,285 at the end of every month beginning from the month of disbursement. The loan is at fixed rate of interest of 11.25% p.a. (reducing monthly balance basis) with tenure of 15 years. Harish has taken a money back insurance plan of 20 year term with sum assured of Rs. 6 Lakh, the annual premium being Rs. 26,250. He has paid 14 annual premiums till date regularly. The policy provides for 20% of the basic sum assured to the insured as survival benefit after 4th, 8th, 12th, 16th years from the start of the policy. He has also taken a Mediclaim family floater policy which covers his spouse and two sons to the extent of Rs. 5 Lakh. He has also paid four regular annual premiums of Rs. 36,000 in a unit linked pension plan and next premium is due on 1st Dec 2010.
Harish’s parents are senior citizens and live in their own house in Haldwani District. Their only source of income is by way of interest received from their joint Senior Citizen Savings Scheme account. Harish’s younger brother, who is also self-employed, is living with his parents.
Harish had invested Rs. 1 lakh to buy 200 shares of a listed company, Mobizox, in the year 2001-02. The Company had issued Bonus shares in the ratio 1:1 in the year 2005-06.Harish also subscribed to the Company’s Rights issue of one share for every four shares held at a price of Rs. 250 per share in Feb 2010. Harish also invested Rs. 4 lakh in an Agriculture land at his native village in Haldwani in 2000-01.
Goals and aspirations
1.To make provision for their children’s higher education expenses at their respective age of 21 years.
2.Such expenses are Rs. 5 lakh for each child at current prices.
3.To make provision for children’s marriage expected at the end of 10 years and 15years from now; presently valued at Rs. 5 lakh each.
4.Build a corpus for his retirement at the age of 58 years
5.To go on vacation with family in January, 2011
Assumptions
1.Inflation is currently 6% p.a. and is likely to remain the same.
2.Risk free interest rate is at 7% p.a.
3.Return on equity MF is 12% p.a.
4.Return on debt MF is 8% p.a.
5.Cost Inflation index is 281 for 1995-96, is 406 for 2000-01, is 463 for 2003-04, is 551for 2007-08, is 582 for 2008-09 and is 632 for 2009-10.
Section A (1 Mark)
Surender is a driver who causes injuries to a pedestrian by his rash driving. The injured victim had to spend Rs.1000 in treating his injuries. Surender ‘s act has created liabilities under:
Section A (1 Mark)
Which of the following statements least accurately describes a form of risk associated with investing in fixed income securities?
Section A (1 Mark)
Depending on how questions are asked, ___________ can cause investors to communicate responses to questions about risk tolerance that are either unduly conservative or unduly aggressive.
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 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)
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 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 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)
In US which form tells your employer all they need to know about your tax-related allowance information?
Section B (2 Mark)
____________ are good examples of the limits to arbitrage because they show that the law of one price is violated.
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 A (1 Mark)
A company, other than an Indian Company would be a resident in India for the previous year if during that year its control and management is situated:
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)
The steps to establishing an investment policy are to state the
Section A (1 Mark)
The length of the insurance industry’s business cycle is shortened because of
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 B (2 Mark)
Mr. Subhash Bansal, a marketing manager is employed with IMFB limited. He took an advance of Rs. 1,20,000 against the salary of Rs. 30,000 per month in the month of March 2007. The gross salary of Mr Bansal for the assessment year 2007-08 shall be:
Section A (1 Mark)
Short-term capital gain arising for the transfer of equity shares and units of equity oriented fund shall be taxable
Section 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 B (2 Mark)
Investors will choose investments that resonate with their own personality or that have characteristics that investors can relate to their own behavior. Taking the opposite view, investors ignore potentially good investments because they can’t relate to or do not come in contact with characteristics of those investments. For example, thrifty people may not relate to expensive stocks (high price/earnings multiples) and potentially miss out on the benefits of owning these stocks.
Which of the following Availability Bias have been exhibited in the case above?
Section B (2 Mark)
Akash has only compulsory third party policy for his car. He jumped a red light and collided with another car and then with the boundary wall of a nearby house. Damage to his car was of Rs. 17,000/-, damage to other car was of Rs. 15,000/- and damage to the boundary wall of house was of Rs. 15,000. The insurance policy of Akash will pay:
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)
Income received in India in previous year is taxable in the hands of:
Section A (1 Mark)
After buying two stocks, one rises by 25% an d the other drops by 25%. You congratulate yourself on your brilliance for the first stock and blame bad luck on the second. You are demonstrating which investor bias?
Section B (2 Mark)
Which of the following factors affect the price of a stock option?
Section A (1 Mark)
Investments that are difficult to convert to cash are said to have _________
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 B (2 Mark)
Vikrant Juneja gifted his house property to his wife in year 2007. Mrs. Juneja then lets out this house @ Rs. 5000 per month. The income from such house property will be taxable in the hands of:
Section C (4 Mark)
Read the senario and answer to the question.
Whether Mrs. Deepika as a resident individual can invest in units of Mutual Funds, Venture Funds, and Promissory notes without opening the bank account in foreign country?
Section C (4 Mark)
Consider the following information for three mutual funds:
Market Return 10%
Risk free return is 7%.
Calculate Jensen measure (%).
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)
While choosing wealth management firms the criteria a client would consider include is/are:
Section B (2 Mark)
An investor is considering the purchase of a small office building and, as part of his analysis, form the following given data calculate the Net Operating Income (NOI).
Section A (1 Mark)
The income received by the approved superannuation fund on the investments made by the fund is
Section A (1 Mark)
Which of the following will be specifically considered while assessing a property and establishing comparisons with other properties?
Section B (2 Mark)
Manav wishes to have a retirement corpus of Rs. 2,50,000/- in 30 years’ time. Assuming that he can earn a ROI of 12 % per annum, what amount he should invest yearly into a fund to reach his goal?
Section C (4 Mark)
The following parameters are available for four mutual funds:
Calculate Treynor’s performance index for each of the funds on the assumption that r=6% where r stands for the risk – free interest rate.
Section A (1 Mark)
____________ is defined as a dollar per thousand dollars of assessed value of property and is used to calculate a property owner's tax bill.
Section A (1 Mark)
A(n) _____________ is related to the credit option and is usually aimed at lenders able to handle comparatively limited declines in value but wants insurance against serious losses.
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)
Which of the following is an effective strategy in times of falling interest rates?
Section B (2 Mark)
R acquired shares of G Ltd, on 15/12/1998 for Rs. 5 lakh which were sold on 15/5/2011 for Rs. 18.50 lakh. Expenses of transfer were Rs. 20,000/-. He invests Rs. 6 lakh in the bonds of NHAI on 16/10/2011. Compute the capital gain for the assessment year 2012-13.
Section A (1 Mark)
The information in your credit report is primarily used by the credit bureau to compute your
Section A (1 Mark)
In whose total income, the income of a minor child is included –
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)
Single men trade far more often than women. This is due to greater ________ among men.
Section A (1 Mark)
REIT Preferred Stock can offer lower total returns than common stock and have some liquidity issues as well.
Section B (2 Mark)
Which of the following statements with respect to US Taxation Structure is/are correct?
Section A (1 Mark)
Which one of the following equations correctly defines the dividend yield (Y) from a share of common stock?
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)
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 A (1 Mark)
_____________ is defined as the transfer of services to private enterprise in US.
Section A (1 Mark)
Which of the following is not true with respect to H model of equity valuation?
Section B (2 Mark)
Non-Resident (NR) is __________on Indian Income and ___________on Foreign Income.
Section B (2 Mark)
In the calculation of rates of return on common stock, dividends are _______ and capital gains are _____.
Section A (1 Mark)
In US which of the following is classified as passive income?
Section B (2 Mark)
When the income of an individual includes Rs. 20000 as the income of his minor child in terms of section 64(1A), taxable income in this respect will be:
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 C (4 Mark)
Read the senario and answer to the question.
By calculating HLV of Mahesh indicate the shortfall in his life insurance coverage using the given data:
Mr. Mahesh age 52, retirement age 60, paying professional tax of Rs. 5800 and income tax subject to allowable deductions as Rs. 230000, reasonable self maintenance expenditure estimated Rs. 140000 p.a., life insurance premium for self Rs. 25000 with total sum assured Rs. 1200000. He also pays insurance premium of Rs. 15500 and Rs. 7000 for life insurance policy of his wife and son respectively. Rate of interest assured for capitalization of future income is at 7%
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)
What amount needs to be invested today at 10 % per annum, so that it pays Rs. 1 lac per annum for 5 years, starting from 6th year to 10thyear. First payment starts at BEGIN of 6thyear.?
Section B (2 Mark)
An analyst expects a firm’s earning per share to grow at 8% per year. If the firm now earns Rs. 3.50 a share, its earnings per share five years from now are expected to be:
Section A (1 Mark)
Anurag has invested Rs. 10 lakh. in a pension fund that pays an interest rate of 12% p.a. compounded quarterly. If Anurag wants to withdraw money after 25 years every month for next 20 years what amount can he withdraw.
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 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 makes sense for him.
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)
Rajiv's company was just surprised by a new competitor in their field. Rajiv wants to plan a way for his business to retake the lead. For this purpose, Rajiv offered a plan to compete in the market. Which one of the following parts of the strategic landscape has been described?
Section C (4 Mark)
Suppose you have decided to sell your house and downsize by acquiring a townhouse that you have been eyeing for several years. You do not feel extreme urgency in selling your house; but the associated taxes are eating into your monthly cash flow, and you want to unload the property as soon as possible. Your real estate agent, whom you have known for many years, prices your home at Rs 90,00,000—you are shocked.
You paid Rs 250,000 for the home only 15 years ago, and the Rs 900,000 figure is almost too thrilling to believe. You place the house on the market and wait a few months, but you don’t receive any nibbles. One day, your real estate agent calls, suggesting that the two of you meet right away. When he arrives, he tells you that Pharma Growth, a company that moved into town eight years ago in conjunction with its much-publicized initial public offering (IPO), has just declared bankruptcy.
Now, 7,500 people are out of work. Your agent has been in meetings all week with his colleagues, and together they estimate that local real estate prices have taken a hit of about 10 percent across the board. Your agent tells you that you must decide the price at which you want to list your home, based on this new information. You tell him that you will think it over and get back to him shortly.
Assume your house is at the mean in terms of quality and salability.
What is your likeliest course of action if you exhibit Anchoring and Adjustment bias?
Section A (1 Mark)
According to behavioral finance, investors prefer dividends because:
Section A (1 Mark)
Which of the following could be classified as an emotional bias?
Section C (4 Mark)
Suppose an investor Mr. Kishan Raj is holding ABC Ltd. currently trading at Rs. 4758. He decides to establish a collar by writing a Call of strike price Rs. 5000 for Rs. 39 while simultaneously purchasing a Rs. 4700 strike price Put for Rs. 27.
What would be the Net Payoff of the Strategy?
• If Nifty closes at 4948
• If Nifty closes at 4858
Section B (2 Mark)
Suppose you are working with two factor portfolios, Portfolio 1 and Portfolio 2. The portfolios have expected returns of 15% and 6%, respectively. Based on this information, what would be the expected return on well-diversified portfolio A, if A has a beta of 0.80 on the first factor and 0.50 on the second factor? The risk-free rate is 3%.
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)
Notice of loss should be given to the insurer within ________days of the event of loss.
Section A (1 Mark)
Which of the following is not true about traditional defined benefit plans?
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 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)
Vikash has following portfolio with related details given below:
Calculate the portfolio beta?
Section A (1 Mark)
Which of the following might be used as a factor in an APT factor model?
Section A (1 Mark)
Which of the following is NOT one of the phases of the life-cycle theory of asset allocation?
Section A (1 Mark)
Commodity exchanges enable producers and consumer to hedge their _______ given the uncertainty of the future.
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)
………………………arises by operation of law eg trust created under MWP Act
Section B (2 Mark)
Which of the following is an assumption of two stage dividend discount model?
Section A (1 Mark)
The most profitable credit card customers for a bank are those that:
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 A (1 Mark)
Which of the following statements regarding inflation and investing are true?
Section B (2 Mark)
As per Double Taxation Avoidance Agreement, the Royalties in UAE is charged at:
Section B (2 Mark)
Which of the following statements is/are correct with respect to Mental Accounting?
Section B (2 Mark)
Lokesh purchased a flat on 1-4-1996 for Rs. 10,00,000/-. He sells the same flat on 1-10-2006 for Rs. 25,00,000/-.As a CWM® calculate the Indexed Cost of Acquisition on which capital gain would be calculated. (The CII of year 1995-96 is 281, for year 1996-97 is 305, for year 2005-06 is 497 and for year 2006-07 is 519).
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 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 C (4 Mark)
Read the senario and answer to the question.
Vinay has come across two projects, each with a 12% required rate of return and under given cash flows:
If the projects are independent, you being a CWM® would advise Vinay to:
Section A (1 Mark)
If the deceased has two widows, four sons and two daughters then what is the share of each widow
Section A (1 Mark)
As per ARTICLE 12 in DTTA with US , the maximum tax rate on the gross amount of the royalties or fees for included services in the Article is:
Section C (4 Mark)
Assume the following;
With this agreement, every 6 months, the transfer of funds takes place between fixed rate payer and floating rate payer.
What would Net Cash flows after 6-months from the initiation date?
Section B (2 Mark)
Mr. L Singh used machinery in his business. This is the only asset in the block. 20% of the usage is for personal purposes. The WDV of the block as on 31.3.2011 is —
Section C (4 Mark)
As an investor you have a required rate of return of 14 percent for investments in risky stocks. You have to analyze three risky firms and must decide which (if any) to purchase. Your information is
What is the maximum price? Which (if any) should buy?
Section A (1 Mark)
You buy a investment plan by investing Rs. 5000/- per month for first 12years if the investment pays Rs. 5000 for the next 12 years and the rate of interest is 15% per annum compounded monthly. How much amount would you have after 24 years?
Section C (4 Mark)
Suppose that an investor makes an investment in Stock ABC and that over the next 12 months ABC appreciates by 10 percent. He then thinks of selling ABC for normal portfolio rebalancing purposes, but then come across an item in the, The Economic Times that sparks new optimism: Could ABC climb even higher?
Which answer describes the likeliest response from an investor with regard to exhibiting Regret Aversion Bias, given ABC’s recent performance and this new information?
Section A (1 Mark)
Which of the following services are related to the field of Real Estate?
Section A (1 Mark)
Which of the following act is done by the most dissatisfied customers?
Section B (2 Mark)
If after the partition of an HUF 2 members became partners in 3 firms on behalf of their respective HUFs and they also become partners in a fourth firm. The funds were obtained by means of loans from the other 3 firms. The share incomes of the members from the fourth firm were assessable as their individual income only.
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)
What is the size of the final unequal payment of a loan for Rs15 600 and it has monthly payments of Rs500? The interest rate is 9.92% compounded quarterly.
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 B (2 Mark)
Mr. Jatin is a single forty nine year-old pharmaceutical executive earningRs25,00,000 per year. He lives extravagantly, occasionally spending more than his income, but has saved approximately Rs. 15,00,000. His primary investment goal is to donate Rs30,00,000 to his alma mater, but cannot obtain life insurance. Mr. Jatin exhibits the following biases:
Section B (2 Mark)
If one earns 10% on investment but inflation is 2%, real rate of return is
TESTED 21 Nov 2024
