Pass the AAFM Chartered Wealth Manager CWM_LEVEL_2 Questions and answers with ExamsMirror

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 C (4 Mark)

Yogesh Jain is a Chartered Accountant by profession and a very disciplined investor he has started investing from today in an account Rs. 1,00,000 every year (beginning of year) and plans to increase his contribution by 10% every year. If the ROI he gets is 15% per annum compounded half yearly calculate the corpus he would be able to accumulate in 25 years.

Section B (2 Mark)

Total income of an individual including long-term capital gain of Rs. 50,000/- is Rs.1,60,000/-, the tax on total income for the assessment year 2012-13 shall be: CII-12-13: 852,11-12: 785,10-11:711]

Section A (1 Mark)

A type of CRM Dominant characteristic which applies technology across organizational boundaries with a view to optimizing company, partner and customer value is known as_______________.

Section A (1 Mark)

An example of a highly cyclical industry 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 B (2 Mark)

A typical personal accident policy would normally have provisions to pay

Section C (4 Mark)

Pacific Asia reported net income of Rs770 million in 1993, after interest expenses of Rs320 million. (The corporate tax rate was 36%.) It reported depreciation of Rs960 million in that year, and capital spending was Rs1.2 billion. The firm also had Rs4 billion in debt outstanding on the books, rated AA (carrying a yield to maturity of 8%), trading at par (up from Rs3.8 billion at the end of 1992). The beta of the stock is 1.05, and there were 200 million shares outstanding (trading at Rs60 per share), with a book value of Rs5 billion. Pacific Asia paid 40% of its earnings as dividends and working capital requirements are negligible. (The Risk Free rate is 7%.)

Estimate the free cash flow to the firm in 1993.

Section B (2 Mark)

Which of the following statements is/are False?

Section A (1 Mark)

While matching orders for equity trading in NSE, which one of the following gets precedence over all the others?

Section B (2 Mark)

Total income for assessment year 2012-13 of an individual including long-term capital gain of Rs. 60,000/- is Rs. 1,80,000/-. The tax on total income shall be: [CII-12-13: 852,11-12: 785,10-11:711]

Section A (1 Mark)

During “Early accumulation” life stage, typical asset allocation should be

Section B (2 Mark)

In a wealth management Platform which of the following is/are the functions of Middle/Back Office – Advisor

Section A (1 Mark)

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

Section A (1 Mark)

When the sponsored entities creates CMOs they often use different _____________ which each promise a different coupon rate and which have different maturity and risk characteristics.

Section A (1 Mark)

An agreement entered into between the owner of the vacate land and the builder/ developer is known ____________.

Section A (1 Mark)

Notice of loss should be given to the insurer within ________days of the event of loss.

Section B (2 Mark)

What an employee should check in his retirement benefit plan offered by the employer?

Section A (1 Mark)

You buy a investment plan by investing Rs. 5000/- per month for first 12years and Rs. 10000/- per month for next 12 years. If the rate of interest is 15% per annum compounded monthly . How much amount would you have after 24 years?

Section C (4 Mark)

Read the senario and answer to the question.

If Mr. Mehta is paying interest rate 12%p.a on his housing loan and 10% p.a. on car loans, in how many months would he pay off his housing loan and car loan?

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 A (1 Mark)

Nifty is a ………………

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 Companies are:

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)

___________ is a measure of the ratio between the net income produced by an assets (usually real estate) and its capital cost.

Section B (2 Mark)

Mr. A gifted debenture of Rs. 100000 to his wife. She received Rs. 10000 interest which she reinvests and earns Rs. 1000. This Rs. 1000 will be taxable in the hands of

Section B (2 Mark)

You have been asked to estimate the market value of an apartment complex that is producing annual net operating income of Rs44,500. Four highly similar and competitive apartment properties within two blocks of the subject property have sold in the past three months. All four offer essentially the same amenities and services as the subject. All were open-market transactions with similar terms of sale. All were financed with 30-year fixed-rate mortgages using 70 percent debt and 30 percent equity. The sale prices and estimated first-year net operating incomes were as follows:

What is the indicated value of the property using direct capitalization?

Section C (4 Mark)

As a CWM you are required to calculate the tax liability of an individual whose taxable income is:

• $ 81250 in SGD and he is a Singapore citizen

• £ 67158p.a (only employment)and he is a UK citizen

Section B (2 Mark)

You are considering the purchase of a quadruplex apartment. Effective gross income (EGI) during the first year of operations is expected to be Rs33,600 (Rs700 per month per unit). First-year operating expenses are expected to be Rs. 13,440 (at 40 percent of EGI). Ignore capital expenditures. The purchase price of the quadruplex is Rs. 200,000. The acquisition will be financed with Rs60,000 in equity and a Rs. 140,000 standard fixed-rate mortgage. The interest rate on the debt financing is eight percent and the loan term is 30 years. Assume, for simplicity, that payments will be made annually and that there are no up-front financing costs.

What is the overall capitalization rate?

Section B (2 Mark)

In the calculation of rates of return on common stock, dividends are _______ and capital gains are _____.

Section A (1 Mark)

Which one of the following definitions of hedge fund strategies is not correct?

Section C (4 Mark)

Read the senario and answer to the question.

Keshav average purchase rate of Infosys share is Rs. 1,000/- per share. At present it is Rs.2,000/- per share. He wants to protect his gains. What would you advise him as the best Option? Assume Rate of 2010 Call is Rs 50, 2010 Put is Rs.55, 1980 Call is at Rs.60 and 1980 Put is at Rs.63. Assume that ten days are left for expiry of the Option.

Section B (2 Mark)

Which of the following statements with respect to International Taxation Structure is/are correct?

Section B (2 Mark)

Mr. Gupta has got his stock insured against fire for Rs5,00,000/- ,during the year he lost the stock in his ware house for Rs. 4,00,000/-. The surveyor from insurance company gave his report that at the time of fire the stock in the ware house had value 6,00,000/-

Calculate what amount Mr. Gupta will receive from the insurance company.

Section A (1 Mark)

Individuals define risk as:

Section A (1 Mark)

Another name for open-end credit is:

Section A (1 Mark)

Which of the following is not an essential element of a trust?

Section A (1 Mark)

The two components of EPS are

Section A (1 Mark)

In US, how many states do not have a corporate income tax?

Section C (4 Mark)

Medicon is one the world's largest manufacturer of implantable biomedical devices, reported earnings per share in 1993 of Rs3.95, and paid dividends per share of Rs0.68. Its earnings are expected to grow 16% from 1994 to 1998, but the growth rate is expected to decline each year after that to a stable growth rate of 6% in 2003. The payout ratio is expected to remain unchanged from 1994 to 1998, after which it will increase each year to reach 60% in steady state. The stock is expected to have a beta of 1.25 from 1994 to 1998, after which the beta will decline each year to reach 1.00 by the time the firm becomes stable. (The Risk Free rate is 6.25%.)

Estimate the value per share, using the three-stage dividend discount model.

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)

Which of the following statements is/are correct with respect to Mental Accounting?

Section C (4 Mark)

A stock ABC Ltd. is trading at Rs. 450. Mr. XYZ is bullish on the stock. But does not want to invest Rs. 450. He does a Long Combo. He sells a Put option with a strike price Rs. 400 at a premium of Rs. 1.00 and buys a Call Option with a strike price of Rs. 500 at a premium of Rs. 2.

What would be the Net Payoff of the Strategy?

• If ABC Ltd closes at 625

• If ABC Ltd closes at 328

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 C (4 Mark)

Mr. Amit Jain has bought a house today which cost him Rs. 50 lacs by taking a loan of 30lacs for 15 years at 11% per annum compounded monthly. He currently has 10 lacs of financial assets and plans to save Rs. 3.25 lacs every year at the beginning of the year for the next 5 years. All his investments are expected to grow at a ROI of 15%per annum compounded quarterly. What will be the net worth of Mr. Amit after 5 years if the value of the house after 5 years is expected to be 75 lacs.

Section A (1 Mark)

Wages for the purpose of gratuity payment as per the Act means

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 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 A (1 Mark)

Which part of the wealth management planning deals with efficient and optimum use of credit for the business.?

Section B (2 Mark)

The modified duration of a bond is 7.87. The percentage change in price using duration for a yield decrease of 110 basis points is closest to: