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

Section A (1 Mark)

A “Family Office” segment client has investible assets worth of

Section B (2 Mark)

Select the CORRECT statement regarding basis risk associated with futures.

Section A (1 Mark)

Monitoring and rebalancing a portfolio over time involves all of the following costs EXCEPT

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)

In order to remain competitive, non-core providers need to achieve the following:

Section C (4 Mark)

Your company had the following balance sheet and income statement information for 2003:

The industry average inventory turnover is 5. You think you can change your inventory control system so as to cause your turnover to equal the industry average, and this change is expected to have no effect on either sales or cost of goods sold. The cash generated from reducing inventories will be used to buy tax-exempt securities which have a 7 percent rate of return. What will your profit margin be after the change in inventories is reflected in the income statement?

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 C (4 Mark)

Read the senario and answer to the question.

Calculate his Life Insurance Coverage Ratio based on his net worth.

Section A (1 Mark)

Which of the following measures is lowest for a currently callable bond?

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)

Credit cards are the best example of a _____________ that offer consumers convenience and flexibility.

Section A (1 Mark)

First step in developing a Wealth Management Plan is

Section A (1 Mark)

Mr. Naresh is working in a reputed company and earning Rs. 5,00,000/- p.a. and is now 50 years old. He has invested Rs. 2,50,000/- in an annuity which will pay him after 5 years a certain amount p.a. at the end of every year for 10 years. Rate of interest is 8% p.a. Calculate how much he will receive at the end of every year after 5 years?

Section A (1 Mark)

When two banks simply agree to exchange a portion of their customers' loan repayments, they are using:

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)

________ bias means that investors are too slow in updating their beliefs in response to evidence.

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)

Onshore wealth management involves ____________

Section B (2 Mark)

Pranoy is entitled to a basic salary of Rs. 5,000 p.m. and dearness allowance of Rs. 1,000 per month, 40% of which forms the part of the retirement benefits. He is also entitled to HRA of Rs. 2,000 p.m. He actually pays Rs. 2,000 p.m. as rent for a house in Delhi. Compute the taxable HRA.

Section B (2 Mark)

An investor is bearish about ABC Ltd. and sells ten one-month ABC Ltd. futures contracts at Rs.5,00,000. On the last Thursday of the month, ABC Ltd. closes at Rs.510. He makes a _________. (assume one lot = 100)

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 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)

A bank plans to offer new subordinated notes in the open market next month but knows that its credit rating is being reviewed by a credit rating agency. The bank wants to avoid paying sharply higher credit costs. Which type of credit derivative contract would you most recommend for this situation?

Section B (2 Mark)

The Sachdeva family includes a financially well-informed couple, both aged thirty-two, and two children aged four and six. They are financially sound, but were not in the market during the bull market of the 2003 to 2007 as many of their neighbors were. The couple’s total income, Rs.12,00,000 which is not expected to grow significantly. They have saved Rs.15,00,000, which they hope will be the financial foundation from which they will send their children to college and retire comfortably. The Sachdeva’s suffer from:

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)

A good wealth management plan must include an analysis of all of the following EXCEPT

Section A (1 Mark)

A cognitive heuristic in which decisions are made based on an initial 'anchor__________

Section C (4 Mark)

Monika 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 Monika do?

Section A (1 Mark)

Mr. Sharma invested Rs. 2,00,000 in an investment that gives Rs 40,000/- for the first 4 years, and Rs. 60,000/- for next 3 years. If the discount rate is 12 %, calculate the Present Value of these cash flows?

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 C (4 Mark)

Which of the following statements are correct?

Section B (2 Mark)

In US, all states except _________________ require their state, via state constitutional or statutory requirements, to balance their budget.

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 C (4 Mark)

Read the senario and answer to the question.

Vinay wants to have 80% of the desired retirement corpus from his monthly savings from now itself. If he expects to earn 12% p.a. on these savings, how much amount should the couple save at the end of each month to achieve this target?

Section C (4 Mark)

Read the senario and answer to the question.

Mr. Bhaitia will continue to invest Rs. 10,000 in his PPF a/c at the beginning of each year till his retirement. Then calculate how much he has to save extra at the end of per month in a scheme to achieve his retirement corpus with a yield of 10%?

Section A (1 Mark)

Which of the following is an assumption of the CMT?

Section C (4 Mark)

Saurabh decided to invest Rs.1,00,000/- in a portfolio of equities and debt mutual funds. He invests Rs. 60,000/– in equities, and 40,000/– in debt mutual fund.

A year later, Saurabh’s portfolio worth reached to Rs. 1,35,000/– (90,000/– equity, 45,000/– debt mutual fund). During the year Rs. 2,500/– cash dividends was received on the equity and Rs. 1,000/– dividend was received on debt mutual fund. Find out Saurabh’s return on equity fund & debt mutual fund for the year?

Section A (1 Mark)

The________________ deals with the double-edged enigma of why individuals like dividends (in developed country where dividends are taxable) and why this method of income distribution persists in light of quite burdensome double taxation.

Section A (1 Mark)

________________ is the most important source of revenue for local governments in US

Section A (1 Mark)

Which of the following income is not exempt under section 10-IT Act 1961?

Section A (1 Mark)

How can complaints provide the firm with great value?

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)

What are the common methods an investors may use to value real estate investments?

Section A (1 Mark)

The trust which is empty at creation during life and tranfers the property into the trust at death is called ____________

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 C (4 Mark)

Consider the multifactor APT. There are two independent economic factors, F1 and F2. The risk-free rate of return is 6%. The following information is available about two well-diversified portfolios:

Assuming no arbitrage opportunities exist, the risk premium on the factor F1 portfolio should be __________.

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 B (2 Mark)

Calculate the total maturity amount payable in a policy of Rs. 4,00,000/-, if the term of the policy was 17 years and bonus was Rs. 52 per thousand per annum and a final bonus of Rs. 125/- per thousand was payable.

Section A (1 Mark)

……………………is a gift in the form of a single transfer to the same person of several things of which one is and the others are not burdened by an obligation, the done can take nothing by the gift unless he accepts if fully.

Section B (2 Mark)

The breakdown of commodity future returns over the past 30 days for 2 upcoming oil future contracts is given below:

What is the roll return for the period 15th September to 15th October for the contracts maturing in November and February?