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]
- A . 562506
- B . 461950
- C . 539980
- D . 710020
Section A (1 Mark)
Which of the following is classified as passive income in US?
- A . Bonus income
- B . Gain on the sale of real estate
- C . Interest income
- D . Income from a limited partnership
Section B (2 Mark)
Eric, who has lived in the Netherlands for the whole of his life, arrives in the UK on 1 June 2011 and remains in the UK until 31 December 2011, when he returns permanently to the Netherlands.
His UK residence status for 2011-12 is:
- A . Resident and ordinarily resident
- B . Resident but not ordinarily resident
- C . Ordinarily resident but not resident
- D . Neither resident nor ordinarily resident
Section A (1 Mark)
The __________ is NOT a market anomaly.
- A . size effect
- B . January effect
- C . earnings announcement anomaly
- D . accounting changes effect
Section A (1 Mark)
NSSO stands for ____________
- A . National Security Space Office
- B . National Shared Services Organization
- C . National Sample Survey Organization
- D . None of the above
Section A (1 Mark)
When markets are in equilibrium, the CML will be upward sloping
- A . Because it shows the optimum combination of risky securities.
- B . Because the price of risk must always be positive.
- C . Because it contains all securities weighted by their market values.
- D . Because the CML indicates the required return for each portfolio risk level.
Section B (2 Mark)
Lucy purchased a rental house a few years ago for $100,000. Total depreciation to date is $35,000. In the current year, she sells the house for $155,000 and pays $10,000 selling expenses. Calculate Lucy’s gain on the sale.
- A . $80,000
- B . $55,000
- C . $45,000
- D . $42,000
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?
- A . 44.26
- B . 47.73
- C . 49.85
- D . 50.44
Section C (4 Mark)
Zoya Ltd has the following Balance sheet for FY 2005-2006:
The Total Sales for the year was Rs. 6,00,000.
The company president believes the company carries excess inventory. Accordingly he wants the inventory turnover ratio to be 8x and would use the freed up cash to reduce current liabilities.
If the company follows the president’s recommendation and sales remain the same, the new quick ratio would be:
- A . 2.4
- B . 3
- C . 4.5
- D . 1.2
Section A (1 Mark)
A company making an IPO can avail which of the following option?
- A . Differential Pricing
- B . Price band
- C . Green-shoe
- D . All of the above
Section A (1 Mark)
Which of the following is true regarding the resistance level?
- A . Resistance levels tend to develop due to profit taking.
- B . It is the level at which a significant decrease in demand is expected.
- C . It is the level at which a significant increase in supply is expected.
- D . Resistance levels usually develop after a stock reaches a new low.
Section A (1 Mark)
Endorsements modify
- A . Life & Health Insurance contracts
- B . Property & Liability Insurance contracts
- C . Both of the above
- D . None of the above
Section B (2 Mark)
Asset allocation policy
- A . I and II
- B . I and III
- C . II and III
- D . None of the above
Section A (1 Mark)
The difference between the cash price and the futures price on the same asset or commodity is known as the
- A . Basis
- B . Spread
- C . Yield spread
- D . Premium
Section C (4 Mark)
Puspinder Singh Ahluwalia took a housing loan on 1st. of June 2009 (EMI in arrear) of Rs. 50 lacs at a ROI of 10.75% p.a. compounded monthly for 12 years. He wants to know the deduction in taxable income he can claim u/s 24 of the IT act for the FY 2011 -12
- A . 480178
- B . 150000
- C . 330178
- D . 125000
Section A (1 Mark)
In US which group is unlikely to support tax limitations?
- A . People who benefit from government spending
- B . People whose tax burdens are heaviest
- C . People who think government wastes a lot of money
- D . Conservatives and Republicans
Section B (2 Mark)
There are three stocks, A, B, and
C. You can either invest in these stocks or short sell them. There are three possible states of nature for economic growth in the upcoming year; economic growth may be strong, moderate, or weak.
The returns for the upcoming year on stocks A, B, and C for each of these states of nature are given below:
If you invested in an equally weighted portfolio of stocks A and B, your portfolio return would be ___________ if economic growth were moderate.
- A . 3.00%
- B . 14.50%
- C . 15.50%
- D . 16.00%
Section B (2 Mark)
As a CWM you are considering the following bond for inclusion in the fixed income portfolio of your client:
What will be the duration of this bond? and What will be the effect of the changes on the duration of the bond if the coupon rate is 6% rather than 9%?
- A . 8 years, Increase
- B . 7.33 years, Decrease
- C . 6.031 years, Increase
- D . 7.012 Years, Decrease
Section A (1 Mark)
For claiming exemption u/s 54G, the assessed shall acquire the new asset within:
- A . 2 years from the date of transfer
- B . 3 years from the date of transfer
- C . one year before or 2 years after the date of transfer
- D . one year before or 3 years from the date of transfer
Section A (1 Mark)
Manav saves Rs. 20,000/- a year for 5 years and Rs. 30,000/- a year for 10 years thereafter.
What will be the total amount in his account after 15 years, if ROI is 10 % per annum?
- A . 784823.87
- B . 694823.87
- C . 894823.87
- D . 794823.87
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?
- A . Rs. 50
- B . Rs. 55
- C . Rs. 45
- D . Rs. 40
Section C (4 Mark)
The returns of 2 shares are as follows
Calculate the covariance of returns.
- A . 220.32
- B . C420.11
- C . 162.08
- D . 270.36
Section A (1 Mark)
Conclusions about technical analysis suggest that:
- A . It is difficult to justify technical analysis
- B . It has been found to be completely deficient
- C . Stock price movements repeat themselves constantly
- D . There is complete agreement about the interpretation of technical signals
Section A (1 Mark)
Which of the following is true regarding the resistance level?
- A . It tends to develop due to profit taking.
- B . It is the level at which a significant decrease in demand is expected.
- C . It is the level at which a significant increase in supply is expected.
- D . It usually develops after a stock reaches a new low.
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:
- A . I and II
- B . I and III
- C . III and IV
- D . I, II and III
Section C (4 Mark)
Read the senario and answer to the question.
Pallavi’s marriage is expected by the end of December, 2010 with an expected present cost of Rs. 24,00,000. He is expected to realize from his Tatanagar Flat 18, 00,000 by that time. Calculate what additional amount is required for his daughter’s marriage.
With 8% pa. risk free rate compounding monthly what amount he has to save per month (BEGIN) in a debt fund?
- A . Rs. 2,27,367 Rs. 7,663
- B . Rs. 3,83,365 Rs. 9,815
- C . Rs. 4,12,245 Rs. 8,615
- D . Rs. 3,45,458 Rs. 11,363
Section B (2 Mark)
Amount of liability of payment of gratuity is calculated at the rate of
- A . One month’s wage for each completed year of service
- B . 20days wages for each completed year of service
- C . Half a month’s wage for each completed year of service
- D . 15 day’s wage for each completed year of service
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 ―
- A . Rs. 2,70,000
- B . Rs. 2,55,000
- C . Rs. 2,10,000
- D . None of the above.
Section B (2 Mark)
Mrs. Sharma, a 40-year-old widow, has an 8-year-old son. Her current savings are not adequate to provide for her son’s post graduate studies, however she will be able to save for it by the time he finishes graduation i.e. when he is 20 years old. Mortality tables indicate that her life expectancy is another 30 years.
Which one of the following is true?
- A . She needs to insure her life for 12 years
- B . She does not need to insure her life
- C . She needs to insure her life for 30 years
- D . She needs to insure her son’s life for 30 years
Section B (2 Mark)
Manish is thinking of acquiring some shares of ABC. Ltd.
The rate of returns is as follows:
Calculate the variance and the standard deviation
- A . 16, 8
- B . 8, 16
- C . 7.4, 54.3
- D . 35.04, 5.92
Section A (1 Mark)
The steps to establishing an investment policy are to state the Pass Your Certification With Marks4sure Guarantee
- A . Minimum investment and maximum fees.
- B . Regulatory guidelines for prudent man investing.
- C . Objectives and constraints and preferences.
- D . Asset allocation parameters and time horizons.
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
- A . Employees’ Provident fund
- B . Workmen’s compensation insurance
- C . Employees’ group life insurance
- D . Employees’ personal accidents insurance scheme
Section B (2 Mark)
As per article 12 Double Taxation Avoidance Agreement with Singapore, Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise and according to the laws of that Contracting State, but if the recipient is the beneficial owner of the royalties or fees for technical services, the tax so charged shall not exceed__________ per cent.
- A . 10
- B . 15
- C . 20
- D . 12
Section C (4 Mark)
Consider the following information for three mutual funds:
Market Return 10%
Risk free return is 7%.
Calculate Jensen measure (%).
- A . 1.70, 5.30, 3.40
- B . 2.25, 3.78, 4.65
- C . 4.35, 3.78, 2.53
- D . 3.17, 4.58, 5.78
Section A (1 Mark)
Which one of the following statements is incorrect?
- A . Most hedge fund managers do not have to explain their investment decisions to investors
- B . A hedge fund side pocket prevents the redemption of certain investments which might be difficult to value
- C . Lock-ups in hedge funds prevent the manager from selling any of his investments without express permission from investors
- D . Gates placed on hedge funds limit the amount that can be withdrawn from it in anyone year
Section A (1 Mark)
Deduction under section 80QQB is allowed in respect of royalty income to:
- A . an individual who is an author of a book
- B . an individual who is resident in India and who is an author of a book
- C . an individual who is resident in India who is either an author of a book or a joint author of the book
- D . None of the Above
Section A (1 Mark)
A muslim gentleman can leave his will, bequeathing all his properties to someone often than his legal heirs to the extent of…………….
- A . His wish
- B . A small portion
- C . One third
- D . One half
Section B (2 Mark)
Which of the following statements is / are correct?
- A . I, II and III
- B . I, III and IV
- C . II, III and IV
- D . All of the above
Section A (1 Mark)
Mr. Rajesh was the owner of an uninsured property. But unfortunately the property caught fire because of which he suffered severe financial losses.
The reason Mr. Rajesh suffered losses as he did not cover:
- A . The investment risk
- B . The pure risk
- C . The speculative risk
- D . The dynamic risk
Section C (4 Mark)
Dab Ltd manufactures, markets, and services automated teller machines.
The following are selected numbers from the financial statements for 1992 and 1993 (in millions):
The firm had capital expenditures of Rs15 million in 1992 and Rs18 million in 1993. The working capital in 1991 was Rs180 million.
Estimate the cash flows to equity in 1992 and 1993. (in Rs Millions)
- A . 45 and (20.5)
- B . 43.60 and (21)
- C . 76 and 19.55
- D . 102 and 301
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.
- A . credit option
- B . Total return Swap
- C . credit linked note
- D . credit swap
Section A (1 Mark)
Mansi has deposited Rs. 7,00,000/- in a bank today @ ROI of 10 % per annum compounded monthly.
She wants to know that if she withdraws this money in monthly installments at the END of the month for 7 years, then how much will be the each installment amount?
- A . 10788.23
- B . 13012.23
- C . 11,620.82
- D . 12012.23
Section A (1 Mark)
The critical variable in the determination of the success of the active portfolio is ________.
- A . Alpha/systematic risk
- B . Alpha/nonsystematic risk
- C . Gamma/systematic risk
- D . Gamma/nonsystematic risk
Section A (1 Mark)
An example of a highly cyclical industry is ________.
- A . The automobile industry
- B . The tobacco industry
- C . The food industry
- D . A and B
Section B (2 Mark)
Which of the following statements concerning index funds and actively managed funds is true?
- A . Their performance is about equal.
- B . They tend to have an inverse relationship.
- C . Actively managed funds tend to outperform index funds.
- D . Index funds tend to outperform actively managed funds.
Section A (1 Mark)
How many states operate lotteries to generate revenue in US?
- A . 39
- B . 40
- C . 48
- D . All 50 states operate lotteries to generate revenue.
Section C (4 Mark)
Read the senario and answer to the question.
If Mrs. Deepika, a conservative investor, has Rs. 50, lakhs today that she could invest for the next three months in a three month bank CD or in a stock. The bank CD offers a guaranteed return 6 % over the three-month period. Alternatively she thinks the price of the stock will rise by 5% over the next months. She is confused in taking the decision.
Guide her in trade off between return and risk so that she makes a decision in choosing investments?
- A . As the return on stock is higher in next 3 months she should decide to invest in stock.
- B . The future price of the stock is uncertain, her return from investing in this stock is also uncertain. The return could be less than 5% and might be even negative. But in Bank CD return is guaranteed. So as a conservative investor she should decide of invest in the Bank CD.
- C . For making a balance trade off between return and risk she should invest 50% in each investment
- D . Option B and C
Section A (1 Mark)
A cognitive heuristic in which decisions are made based on an initial ‘anchor__________
- A . Anchoring and Adjustment Bias
- B . Ambiguity Bias
- C . Confirmation bias
- D . Overconfidence Bias
Section A (1 Mark)
Manoj owns five hundred shares of ABC Ltd. Around budget time, he gets uncomfortable with the price movements.
Which of the following will give him the hedge he desires (assuming that one futures contract = 100 shares)?
- A . Buy 5 ABC Ltd. futures contracts
- B . Sell 5 ABC Ltd. futures contracts
- C . Sell 10 ABC Ltd. futures contracts
- D . Buy 10 ABC Ltd futures contracts
Section C (4 Mark)
Read the senario and answer to the question.
You have reviewed the investments of Nimita for the purview of retirement. You advise that a balance be restored from risk perspective and accordingly Rs. 15 lakh be shifted to a Debt MF scheme. You advise to further start SIPs immediately in the ratio of 60:40 in the newly started debt MF scheme and the existing Equity MF scheme for the next 21 years to accumulate a corpus so that the same sustains for the next 25 years if invested in an investment instrument yielding 7.50%.
What approximate amount of SIPs should be made in Debt and Equity MF schemes?
- A . Rs. 58,000 in Debt MF scheme & Rs. 39,000 in Equity MF scheme
- B . Rs. 55,400 in Debt MF scheme & Rs. 37,000 in Equity MF scheme
- C . Rs. 60,000 in Debt MF scheme & Rs. 40,000 in Equity MF scheme
- D . Rs. 42,000 in Debt MF scheme & Rs. 28,000 in Equity MF scheme
Section C (4 Mark)
Read the senario and answer to the question.
Mr. Bhatia is interested to invest in a mutual fund SIP account and expecting which will grow by atleast 12% for Neena’s education need. Calculate how much he has to deposit per month?
- A . Rs. 12,952
- B . Rs. 14,956
- C . Rs. 15,913
- D . Rs. 16,946
Section A (1 Mark)
Response of listening falls under which one of the following categories?
- A . It can be verbal
- B . It can be nonverbal
- C . It can be verbal or nonverbal
- D . It can neither be verbal nor nonverbal
Section C (4 Mark)
Read the senario and answer to the question.
Mr. Bhatia owns a Maruti Wagonr with a monthly EMI of Rs. 6,312. The above loan will be completely repaid by August 2008. Mr. Bhatia planning to purchase a new car worth of Rs. 15 lakh. For this he has to take a full value loan of the car with 9% interest for 5 years. But his present car is in good condition and life of this car is approximately another 5 years repairs and maintenance cost are minimum. If he postpones his car purchasing plan now and deposit the same EMI outflow required for new car into an SIP with a minimum 15% yield for the next five years, then calculate the fund he can accumulate?
- A . Rs. 23.66 lacs
- B . Rs. 27.58 lacs
- C . Rs. 23.49 lacs
- D . Rs. 30.47 lacs
Section B (2 Mark)
Which of the following is an inferential data (i.e. data which may not be correctly obtained by simply asking a direct question)?
- A . Time Horizon
- B . Risk appetite
- C . Current Income
- D . Future income requirement
Section A (1 Mark)
If a portfolio manager consistently obtains a high Sharpe measure, the manager’s forecasting ability __________.
- A . is above average
- B . is average
- C . is below average
- D . None of the Above
Section C (4 Mark)
To fulfil the Educational Qualification to be registered as an Investment Advisor under the SEBI Investment Advisor Regulations 2013.
The applicant must:
- A . Both I and IV
- B . Both II and III
- C . Either of I or II and Either of III or IV
- D . All I, II, III and IV
Section B (2 Mark)
The following parameters are available for two mutual funds:
Calculate Treynor’s performance index for Fund A & Fund B respectively
- A . 8, 1.66
- B . 10, 3.33
- C . 9, 2.50
- D . 18, 4.25
Section C (4 Mark)
Read the senario and answer to the question.
If Mahesh has the option of 3 funds whose details are as below, find Jensen’s index for fund A, Treynor index for fund B and Sharpe index for the market
- A . 0.7%; 2.2; 0.1764
- B . 0.5%; 2.2; 0.1764
- C . 1%; 2.2; 0.5
- D . 1%; 2.2; 0.8
Section A (1 Mark)
_____________allow investors to increase diversification in direct real estate holdings by investing in groups of real estate projects.
- A . Lease / Tenancy Agreement
- B . Aggregation Vehicles
- C . High and Best Use of Property
- D . Leveraged Equity Position
Section B (2 Mark)
Calculate the NOI for an office building with the following information:
- A . Rs. 1,73,500
- B . Rs. 1, 91,000
- C . Rs. 1,93,500
- D . Rs. 2,11,000
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:
- A . Rs. 20000
- B . Rs. 15000
- C . Nil
- D . Rs. 18500
Section A (1 Mark)
A bank that wants to protect itself from higher credit costs due to a decrease in its credit rating might purchase _________________________.
- A . A credit risk option
- B . A standby letter of credit
- C . A credit linked note
- D . A credit swap
Section A (1 Mark)
Which of the following is not true in respect of CIBIL?
- A . Pulling up CIBIL report is mandatory for all loans.
- B . Mandate for pulling up the report and sharing of information from customer is mandatory.
- C . Report is to be pulled up at the front end.
- D . None of the above.
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?
- A . Rs 3,30,000
- B . Rs 3,90,351
- C . Rs3,75,000
- D . Rs 3,57,000
Section A (1 Mark)
During “Building the foundation” life stage, we learn about _______
- A . Budgeting
- B . Five Fundamental of Fiscal Fitness
- C . Three Fundamental of Fiscal Fitness
- D . Seven Fundamental of Fiscal Fitness
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:
- A . £13,125
- B . £17,500
- C . £14,000
- D . £nil
Section A (1 Mark)
A market timing approach that increases the proportion of funds in stocks when the stock market is expected to be rising, and increases cash when the stock market is expected to be falling is a:
- A . Strategic asset allocation
- B . Tactical asset allocation
- C . Portfolio optimization
- D . Liquidity expectation timing
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.
- A . 1495512
- B . 18614.48
- C . 20614.48
- D . 18311.71
Section A (1 Mark)
Corrections are often followed by ________.
- A . Channel lines.
- B . Momentum.
- C . Reversals.
- D . Consolidation.
Section A (1 Mark)
The investors who buy the debt of troubled companies including subordinated debt, junk bonds, bank loans, and obligations to suppliers are called__________
- A . Vulture Investors
- B . Angel Investors
- C . Seed Investors
- D . None of the Above
Section A (1 Mark)
Which of the following statements is/are correct with respect to naïve diversification?
- A . Only I
- B . Only II
- C . Both of the above
- D . None of the Above
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.
- A . 90
- B . 182
- C . 60
- D . 120
Section C (4 Mark)
Read the senario and answer to the question.
Jogen commuted his 40% of pension in April, 2008 with Rs. 2,15,000.
What would be the taxable amount on commuted pension received by Jogen, if he would retire from a private organization?
- A . Rs. 1,07,500
- B . Rs. 35,833
- C . Rs. 1,70,167
- D . Rs. Nil
Section B (2 Mark)
Which of the following statements is most correct?
- A . If a company increases its current liabilities by Rs1,000 and simultaneously increases its inventories by Rs1,000, its current ratio must rise.
- B . If a company increases its current liabilities by Rs1,000 and simultaneously increases its inventories by Rs1,000, its quick ratio must fall.
- C . A company’s quick ratio may never exceed its current ratio.
- D . Answers b and c are correct.
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 Royalities are:
- A . 10
- B . 15
- C . 20
- D . 18
Section A (1 Mark)
In a short call, profit is
- A . Unlimited
- B . Limited to premium
- C . Premium Plus Market Price minus exercise price
- D . Premium minus exercise price
Section A (1 Mark)
Unabsorbed depreciation can be carried forward for ____________.
- A . 8 Years
- B . 4 Years
- C . Indefinite
- D . None
Section C (4 Mark)
Pizer Drugs, a large drugstore chain, had sales per share of Rs122 in 1993, on which it reported earnings per share of Rs2.45 and paid a dividend per share of Rs1.12. The company is expected to grow 6% in the long term, and has a beta of 0.90. The current Risk Free Rate is 7%.
Estimate the appropriate Price for Pizer Drug and what would the profit margin need to be to justify the price per share if the stock is currently trading for Rs34 per share, assuming the growth rate is estimated correctly,
- A . Rs20.18 and 4.12%
- B . Rs 21.05 and 5.25%
- C . Rs 19.87 and 3.42%
- D . Rs 18.54 and 3.75%
Section B (2 Mark)
The _________ is a plot of __________.
- A . CML, individual stocks and efficient portfolios
- B . CML and both efficient and inefficient portfolios, only
- C . SML and individual securities and efficient portfolios
- D . SML and individual securities, inefficient portfolios, and efficient portfolios.
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?
- A . 3498723.56
- B . 4089226.15
- C . 2345226.34
- D . 4298712.9
Section C (4 Mark)
Read the senario and answer to the question.
What would be the taxable amount on gratuity received by Jogen, if he would retired from an organization where employees are not covered under Gratuity Act?
- A . Rs. 75,000
- B . Rs. 3,50,000
- C . Rs. Nil
- D . Rs. 69,300
Section B (2 Mark)
The current market price of a share of CAT stock is Rs76. If a call option on this stock has a strike price of Rs76, the call
- A . Is out of the money.
- B . Is in the money.
- C . Is at the money.
- D . A and C.
Section B (2 Mark)
A project should be considered if the Profitability Index is
- A . Less than 1
- B . More than 1
- C . More than to 0.5
- D . None of the above
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:
- A . Rs. 45,000
- B . Nil
- C . Rs. 25,000
- D . Rs. 35,000
Section A (1 Mark)
Which of the following is an investment analysis approach to determine real estate values?
- A . The cost approach
- B . The net present value approach
- C . The comparative sales approach
- D . The income approach
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.
- A . Rs. 383.11
- B . Rs. 380.21
- C . Rs. 388.97
- D . Rs. 417.27
Section A (1 Mark)
The first step of portfolio management is:
- A . To assess market conditions.
- B . To determine objectives, constraints and preferences.
- C . To develop strategies and implement them.
- D . To adjust the portfolio as necessary.
Section C (4 Mark)
Nifty is at 3200. Mr. XYZ expects very little movement in Nifty. He sells 2 ATM Nifty Call Options with a strike price of Rs. 3200 at a premium of Rs. 97.90 each, buys 1 ITM Nifty Call Option with a strike price of Rs. 3100 at a premium of Rs. 141.55 and buys 1 OTM Nifty Call Option with a strike price of Rs. 3300 at a premium of Rs. 64.
What would be the Net Payoff of the Strategy?
• If Nifty closes at 3200
• If Nifty closes at 4212
- A . -87.75 and 57.50
- B . -75.25 and -45.65
- C . 90.25 and -9.75
- D . -15.45and 95.75
Section A (1 Mark)
A well-diversified portfolio is defined as
- A . One that is diversified over a large enough number of securities that the nonsystematic variance is essentially zero.
- B . One that contains securities from at least three different industry sectors.
- C . A portfolio whose factor beta equals 1.0.
- D . A portfolio that is equally weighted.
Section B (2 Mark)
In US, all states except _________________ require their state, via state constitutional or statutory requirements, to balance their budget.
- A . Vermont
- B . Texas
- C . All states require a balanced budget
- D . North Carolina
Section A (1 Mark)
One aspect of the tax considerations in asset allocation is that
- A . Capital gains are often taxed at a higher rate than income.
- B . Taxes on capital gains are deferred until the gain is realized.
- C . Investors are exempt from taxes on capital gains once they reach age 65.
- D . Current income is seldom a significant consideration for an investor in the spending phase of the life cycle.
Section B (2 Mark)
Mr. Manish purchased a residential house for Rs.3 lakh on 1-4-1972. Its market value on 1-4-1981 was, however, Rs.12 lakh. He sells the house during the financial year 2011-12 for Rs.98 lakh. Calculate the taxable long term capital gain. [CII-12-13: 852,11-12: 785,10-11:711]
- A . Rs. 12,90,000/-
- B . Rs. 10,90,000/-
- C . Rs. 3,80,000/-
- D . Rs. 7,10,000/-
Section B (2 Mark)
To pay for new equipment with a cash price of Rs7500, you need to borrow at 5.3% compounded monthly, then make monthly payments for 32 months.
How much less would your payments be if you were able to save Rs2100 as a down payment before you purchase the new equipment?
- A . Rs.269.47
- B . Rs.198.96
- C . Rs.70.51
- D . Rs.88.14
Section B (2 Mark)
Consider the one-factor APT. The variance of returns on the factor portfolio is 6%. The beta of a well-diversified portfolio on the factor is 1.1. The variance of returns on the well-diversified portfolio is approximately __________.
- A . 3.60%
- B . 6.00%
- C . 7.30%
- D . 10.10%
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:
- A . Rs. 3,60,000
- B . Rs. 4,80,000
- C . Rs. 2,40,000
- D . Rs. 3,80,000
Section A (1 Mark)
Mansi deposits Rs. 50,000/- in a bank account which pays interest @ 10 % per annum.
How much can be withdrawn at the beginning of each year for 5 years if first withdrawal is 6 years from now?
- A . 20242.42
- B . 22242.42
- C . 31242.42
- D . 21242.42
Section A (1 Mark)
Which of the followings are the important features of Real estate Investment?
- A . Property rights
- B . Time horizon
- C . Geographic Area
- D . All of the above
Section A (1 Mark)
In case of Credit Assessment, if the lender accepts the application and takes it forward towards acceptance provided it passes through the risk assessment criterion, then the Credit Score Band of the borrower would be:
- A . 501 to 700
- B . 601 to 750
- C . 501 to 600
- D . 750 and above
Section B (2 Mark)
___________ applies where there are multiple transactions which are inter-related and cannot be evaluated separately for the purpose of determining arm’s length price of any one transaction.
- A . Comparable Uncontrolled Price Method [CUP]
- B . Resale Price Method [RPM]
- C . Cost-Plus Method [CPM]
- D . Profit Split Method [PSM]
Section A (1 Mark)
Which ONE of the following in not the requirement for managing customer?
- A . Need and want of customers
- B . Measurement of most or least profitability of customer or product
- C . Measurement of least growth potential of product or customer
- D . Knowing which customers will be advocates and supporters