aafm cwm-level-2 practice test

Chartered Wealth Manager (CWM) Certification Level II Examination

Last exam update: Nov 27 ,2025
Page 1 out of 84. Viewing questions 1-15 out of 1259

Question 1

Section A (1 Mark)
According to the __________________ if irrational traders cause deviations from fundamental value,
rational traders will often be powerless to do anything about it.

  • A. Theory of Limited Arbitrage
  • B. Equity premium puzzle
  • C. Present-biased preferences
  • D. Inter Temporal Consumption
Mark Question:
Answer:

A

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Question 2

Section C (4 Mark)
Suppose you have a two-security portfolio containing Bonds A and B. The market value of Bond A is
Rs. 6,000, and the market value of Bond B is Rs4,000. The duration of Bond A is 8.5, and the duration
of Bond B is 4.0. Calculate the duration of the portfolio.

  • A. 5.3
  • B. 8.2
  • C. 6.7
  • D. 3.56
Mark Question:
Answer:

C

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Question 3

Section B (2 Mark)
Which of the following statements is/are true?

  • A. I, II and III
  • B. I, II and IV
  • C. I, III and IV
  • D. II, III and IV
Mark Question:
Answer:

B

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Question 4

Section A (1 Mark)
The best way to maintain your credit rating is to:

  • A. Use credit sparingly.
  • B. Pay cash for your purchases.
  • C. Repay your debts on time.
  • D. Declare a bankruptcy.
Mark Question:
Answer:

C

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Question 5

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_______

  • A. 35
  • B. 85
  • C. 94
  • D. 103
Mark Question:
Answer:

D

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Question 6

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%?

  • A. Rs. 61.75
  • B. Rs. 75.75
  • C. Rs. 71.42
  • D. Rs. 62.26
Mark Question:
Answer:

C

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Question 7

Section A (1 Mark)
One of the tax exemption under avoidance of Double Taxation is U/S Sec 10(6)(ii) for exemption on
income received by the diplomats, ambassador, etc

  • A. TRUE
  • B. FALSE
Mark Question:
Answer:

A

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Question 8

Section A (1 Mark)
In terms of the risk/return relationship

  • A. Only factor risk commands a risk premium in market equilibrium.
  • B. Only systematic risk is related to expected returns.
  • C. Only nonsystematic risk is related to expected returns.
  • D. A and B.
Mark Question:
Answer:

D

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Question 9

Section B (2 Mark)
The Dow theory illustrates that the three forces that simultaneously affect stock prices are
____________.

  • A. I, II, and III
  • B. II, III, and IV
  • C. III, IV and V
  • D. I, II, and IV
Mark Question:
Answer:

D

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Question 10

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.
Mark Question:
Answer:

C

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Question 11

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
Mark Question:
Answer:

A

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Question 12

Section A (1 Mark)
EMH frequently include, among others, assumptions such as:

  • A. I and II
  • B. II and III
  • C. I and III
  • D. All of the Above
Mark Question:
Answer:

D

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Question 13

Section C (4 Mark)
Vinod 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
Vinod do assuming he is following a CPPI policy?

  • A. He should sell stocks and bonds equally
  • B. He should sell Rs.10000 of bonds and invest it into stocks
  • C. He should sell Rs.10000 of stocks and invest it into bonds
  • D. He should buy Rs.20000 of stocks to average
Mark Question:
Answer:

C

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Question 14

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?

  • A. The current liabilities would increase
  • B. The current assets would decline
  • C. The current ratio would decline
  • D. The current ratio would improve
Mark Question:
Answer:

D

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Question 15

Section A (1 Mark)
The last step in fundamental analysis is:

  • A. Economic analysis
  • B. Industry analysis
  • C. Company analysis
  • D. Technical analysis
Mark Question:
Answer:

C

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