AAFM cwm-level-2 practice test

Question 1

Section C (4 Mark)
Read the senario and answer to the question.
Which types(s) of investment(s), would be consistent with their retirement goal?

A. (I) only
B. (I) and (IV) only
C. (I) and (III) only
D. (II) and (IV) only

Answer:

C
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Question 2

Section C (4 Mark)
Read the senario and answer to the question.
Which one of the following statements most accurately describes the risk exposure of the Shankers
portfolio?

• A. The portfolio has excessive market risk.
• B. The portfolio should be unaffected by changes in interest rates.
• C. The portfolio contains an excessive level of business risk.
• D. The portfolio contains excessive purchasing power risk.

Answer:

D

Question 3

Section C (4 Mark)
Read the senario and answer to the question.
Neerajs portfolio consist shares of company X Ltd. which is paying a dividend of Rs. 2 per share. The
dividend is expected to grow @15% annual rate for 3 years, then @10% for the next 3 years, after
which it is expected to grow @5% forever. What among the following would be your advice to Neeraj
in case the market value of the share is Rs. 85? Assume capitalization rate to be 9% per annum

• A. Keep the share as the market price is higher than the current value of the share.
• B. Sell the share as the market price is lower than the current value of the share
• C. Buy more shares as market price is lower than current value
• D. Sell the shares as the market price is higher than the current value of the shares 437/438 Questions & Answers PDF P-

Answer:

D

Question 4

Section C (4 Mark)
Read the senario and answer to the question.
Calculate the Solvency ratio?

• A. 1.19
• B. 2.07
• C. 3.06
• D. 3.02

Answer:

A

Question 5

Section C (4 Mark)
Read the senario and answer to the question.
Raman is considering the purchase of a office building and, as part of his analysis, from the following
given data calculate the appraised value of the property using the Income Approach?
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• A. Rs. 19,50,000
• B. Rs. 19,25,750
• C. Rs. 19,15,500
• D. Rs. 18,75,500

Answer:

A

Question 6

Section C (4 Mark)
Read the senario and answer to the question.
Assume the following additional facts:
The Shankers have purchased a homeowners policy (comprehensive) covering 100% of the
replacement cost of their residence. This policy has a Rs. 500 deductible. Also, they have purchased a
disability income policy with a 30-day elimination period and an any-occupation definition of
disability.
What actions should the Shankers consider in order to improve the quality of the insurance program
described above?

• A. (I) only
• B. (I) and (IV) only
• C. (I) and (III) only
• D. (II) and (IV) only

Answer:

B

Question 7

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

Answer:

B
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Question 8

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?

• A. House loan-321 month, Car Loan-129 months
• B. House loan-540 month, Car Loan-318 months
• C. House loan-342 month, Car Loan-249 months
• D. House loan-432 month, Car Loan-429 months

Answer:

B

Question 9

Section C (4 Mark)
Read the senario and answer to the question.
Harish wants a monthly investment to achieve the goal of his children's higher education. For
accumulation of fund you recommend Harish to invest in an investment vehicle which invests in the
ratio of 20:80 in Debt and Equity. If Harish starts investing from 1st Dec 2010, what approximate
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amount should he set aside every month for each child to achieve the goal? Harish maintains
separate investment accounts for Chirag and Vishesh and invests till they individually turn 21 years of
age.

• A. Rs. 8,400 and Rs. 3,760 respectively
• B. Rs. 8,100 and Rs. 3,640 respectively
• C. Rs. 9,540 and Rs. 4,240 respectively
• D. Rs. 7,850 and Rs. 3,950 respectively

Answer:

A

Question 10

Section C (4 Mark)
Read the senario and answer to the question.
Mr. Saxena is planning to visit USA for the very first time in his carrier to promote software of his
company and is expected to stay long. He wants to plan his journey in such a manner so that he can
get maximum tax benefits in the FY 200708 from the residential status point of view. What is the
latest date when he can afford to leave India & earn status of an NRI to get maximum tax benefits in
assessment year 200809?

• A. On 12-10-2007
• B. On 28-09-2007
• C. On 01-10-2007
• D. On 22-09-2007

Answer:

B