CWM_LEVEL_2 Online Training

1. 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]

2. Section A (1 Mark)

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

3. 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:

4. Section A (1 Mark)

The __________ is NOT a market anomaly.

5. Section A (1 Mark)

NSSO stands for ____________

6. Section A (1 Mark)

When markets are in equilibrium, the CML will be upward sloping

7. 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.

8. 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?

9. 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:

10. Section A (1 Mark)

A company making an IPO can avail which of the following option?

11. Section A (1 Mark)

Which of the following is true regarding the resistance level?

12. Section A (1 Mark)

Endorsements modify

13. Section B (2 Mark)

Asset allocation policy

14. Section A (1 Mark)

The difference between the cash price and the futures price on the same asset or commodity is known as the

15. 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

16. Section A (1 Mark)

In US which group is unlikely to support tax limitations?

17. 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.

18. 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%?

19. Section A (1 Mark)

For claiming exemption u/s 54G, the assessed shall acquire the new asset within:

20. 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?

21. 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?

22. Section C (4 Mark)

The returns of 2 shares are as follows





Calculate the covariance of returns.

23. Section A (1 Mark)

Conclusions about technical analysis suggest that:

24. Section A (1 Mark)

Which of the following is true regarding the resistance level?

25. 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:

26. 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?

27. Section B (2 Mark)

Amount of liability of payment of gratuity is calculated at the rate of

28. 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 ―

29. 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?

30. 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

31. Section A (1 Mark)

The steps to establishing an investment policy are to state the Pass Your Certification With Marks4sure Guarantee

32. 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

33. 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.

34. Section C (4 Mark)

Consider the following information for three mutual funds:





Market Return 10%

Risk free return is 7%.

Calculate Jensen measure (%).

35. Section A (1 Mark)

Which one of the following statements is incorrect?

36. Section A (1 Mark)

Deduction under section 80QQB is allowed in respect of royalty income to:

37. 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…………….

38. Section B (2 Mark)

Which of the following statements is / are correct?

39. 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:

40. 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)

41. 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.

42. 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?

43. Section A (1 Mark)

The critical variable in the determination of the success of the active portfolio is ________.

44. Section A (1 Mark)

An example of a highly cyclical industry is ________.

45. Section B (2 Mark)

Which of the following statements concerning index funds and actively managed funds is true?

46. Section A (1 Mark)

How many states operate lotteries to generate revenue in US?

47. 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?

48. Section A (1 Mark)

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

49. 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)?

50. 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?

51. 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?

52. Section A (1 Mark)

Response of listening falls under which one of the following categories?

53. 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?

54. 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)?

55. Section A (1 Mark)

If a portfolio manager consistently obtains a high Sharpe measure, the manager's forecasting ability __________.

56. 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:

57. Section B (2 Mark)

The following parameters are available for two mutual funds:





Calculate Treynor’s performance index for Fund A & Fund B respectively

58. 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

59. Section A (1 Mark)

_____________allow investors to increase diversification in direct real estate holdings by investing in groups of real estate projects.

60. Section B (2 Mark)

Calculate the NOI for an office building with the following information:

61. 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:

62. 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 _________________________.

63. Section A (1 Mark)

Which of the following is not true in respect of CIBIL?

64. 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?

65. Section A (1 Mark)

During “Building the foundation” life stage, we learn about _______

66. 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:

67. 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:

68. 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.

69. Section A (1 Mark)

Corrections are often followed by ________.

70. 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__________

71. Section A (1 Mark)

Which of the following statements is/are correct with respect to naïve diversification?

72. 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.

73. 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?

74. Section B (2 Mark)

Which of the following statements is most correct?

75. 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:

76. Section A (1 Mark)

In a short call, profit is

77. Section A (1 Mark)

Unabsorbed depreciation can be carried forward for ____________.

78. 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,

79. Section B (2 Mark)

The _________ is a plot of __________.

80. 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?

81. 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?

82. 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

83. Section B (2 Mark)

A project should be considered if the Profitability Index is

84. 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:

85. Section A (1 Mark)

Which of the following is an investment analysis approach to determine real estate values?

86. 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.

87. Section A (1 Mark)

The first step of portfolio management is:

88. 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

89. Section A (1 Mark)

A well-diversified portfolio is defined as

90. Section B (2 Mark)

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

91. Section A (1 Mark)

One aspect of the tax considerations in asset allocation is that

92. 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]

93. 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?

94. 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 __________.

95. 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:

96. 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?

97. Section A (1 Mark)

Which of the followings are the important features of Real estate Investment?

98. 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:

99. 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.

100. Section A (1 Mark)

Which ONE of the following in not the requirement for managing customer?