[Oct-2021] Valid Way To Pass AAFM Exam Dumps with CWM_LEVEL_2 Exam Study Guide
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NEW QUESTION 602
Section A (1 Mark)
A 15 year annuity due has a future value of Rs. 15,00,000/- If ROI is 9 % per annum, then how much will be each annuity amount ?
- A. 46870.02
- B. 47897.12
- C. 56487.32
- D. 35487.98
Answer: A
NEW QUESTION 603
Section B (2 Mark)
Mehak Rana took a loan of Rs 20 Lakh in September 2010 which is payable in 10 years (monthly installments).The rate of interest is 10% p.a.
What would be the remaining principal amount after September 2012?
- A. 0
- B. 1
- C. 2
- D. 3
Answer: C
NEW QUESTION 604
Section A (1 Mark)
____________is the reasonably probable and legal use of vacant land or an improved property that is physically possible, legally permissible, appropriately supported, financially feasible, and that results in the highest value.
- A. High and Best Use of Property
- B. Family Settlement
- C. Will
- D. Lease / Tenancy Agreement
Answer: A
NEW QUESTION 605
Section C (4 Mark)
Dinex Ltd, a leader in the development and manufacture of electronic devices, reported earnings per share of Rs 2.02 in 2003, and paid no dividends. These earnings are expected to grow 14% a year for five years (2004 to 2008) and 7% a year after that. The firm reported depreciation of Rs 2 million in 2003 and capital spending of Rs 4.20 million, and had 7 million shares outstanding. The working capital is expected to remain at 50% of revenues, which were Rs 106 million in 2003, and are expected to grow 6% a year from 2004 to 2008 and 4% a year after that. The firm is expected to finance 10% of its capital expenditures and working capital needs with debt. Dinex Ltd had a beta of 1.20 in 2003, and this beta is expected to drop to 1.10 after 2008. The current risk free rate is 7%.
Estimate the value per share today, based upon the FCFE model.
- A. 37.5
- B. 40.5
- C. 36.5
- D. 35.05
Answer: D
NEW QUESTION 606
Section A (1 Mark)
Hybrid plans are
- A. Combination of ESOP and Money purchase plan
- B. Combination of DB & ESOP plan
- C. None of the above
- D. Combination of DB & DC plan
Answer: D
NEW QUESTION 607
Section A (1 Mark)
The covariance of the market returns with the stocks returns is 0.007. The standard deviation of the market is
7% and standard deviation of stock's return is 10%. What is the correlation coefficient between stocks and market returns?
- A. 0.5
- B. 0.91
- C. 1.25
- D. 0
Answer: D
NEW QUESTION 608
Section A (1 Mark)
Decision horizon is __________
- A. None of the above
- B. Length of time between decisions to revise the portfolio
- C. Minimum time interval over which investors can revise the portfolio
- D. Length of time between decisions to redeem the portfolio
Answer: B
NEW QUESTION 609
Section A (1 Mark)
If the economy were going into a recession, an attractive industry to invest in would be the ________ industry.
- A. A and C
- B. Construction
- C. Medical Services
- D. Automobile
Answer: C
NEW QUESTION 610
Section B (2 Mark)
Calculate the beta on a portfolio from the following data:
- A. 1.23
- B. 0.96
- C. 1.29
- D. 1.5
Answer: B
NEW QUESTION 611
Section B (2 Mark)
The ________________provides that where the total income of an enterprise is computed by the AO on the basis of the arm's length price as computed by him, the income of the other associated enterprise shall not be recomputed by reason of such determination of arm's length price in the case of the first mentioned enterprise, where the tax has been deducted or such tax was deductible, even if not actually deducted under the provision of chapter VIIB on the amount paid by the first enterprise to the other associate enterprise.
- A. Second proviso to section 92C(4)
- B. First proviso to section 92 C(4)
- C. First proviso to section 91 C(4)
- D. Second proviso to section 91C(4)
Answer: A
NEW QUESTION 612
Section B (2 Mark)
You are given the following set of data on security ABC:
Calculate the expected return on security ABC?
- A. 0.13
- B. 0.15
- C. 0.12
- D. 0.14
Answer: B
NEW QUESTION 613
Section C (4 Mark)
Read the senario and answer to the question.
Approximately how much amount she must sacrifice to provide the income stream for her mother?
- A. Rs. 20,62,270
- B. Rs. 22,68,460
- C. Rs. 19,56,380
- D. Rs. 24,24,850
Answer: A
NEW QUESTION 614
Section A (1 Mark)
Long-term cash flow improvement may not be achieved by
- A. Reducing capital expenditure
- B. Increasing equity capital
- C. Reducing long-term debt
- D. Increasing long-term liabilities
Answer: C
NEW QUESTION 615
Section C (4 Mark)
What amount needs to be deposited today in an account that would pay Rs. 1,10,000 per year for the first 10 years and Rs. 2,25,000 for the next 5 years. If the ROI for the first 10 years if 10.75 % p.a. compounded annually and 13% p.a. compounded quarterly for the balance period?
- A. 0
- B. 1
- C. 2
- D. 3
Answer: D
NEW QUESTION 616
Section A (1 Mark)
Mr. Dhir is now 50 years old. He has invested Rs. 1,50,000/- in an annuity which will pay him after 10 years a certain amount p.a. at the beginning of every year for 10 years. Rate of interest is 7% p.a. Calculate how much he will receive at the beginning of every year after 10 years?
- A. 0
- B. 1
- C. 2
- D. 3
Answer: B
NEW QUESTION 617
Section A (1 Mark)
Income from which trust is added to the beneficiary's taxable income?
- A. Religious
- B. Charitable
- C. Private trust
- D. None of the above
Answer: C
NEW QUESTION 618
Section A (1 Mark)
In a short call, profit is
- A. Limited to premium
- B. Premium Plus Market Price minus exercise price
- C. Unlimited
- D. Premium minus exercise price
Answer: A
NEW QUESTION 619
Section B (2 Mark)
Markets would be inefficient if irrational investors __________ and actions of arbitragers were __________.
- A. Existed; limited
- B. Existed; unlimited
- C. Did not exist; unlimited
- D. Did not exist; limited
Answer: A
NEW QUESTION 620
Section B (2 Mark)
A collar with a net outlay of approximately zero is an options strategy that
- A. Uses the gains from sale of a put to purchase a call.
- B. Uses the gains from sale of a call to purchase a put.
- C. Combines a put and a call to lock in a price range for a security.
- D. Both A and B.
Answer: D
NEW QUESTION 621
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 3287
* If Nifty closes at 4925
- A. 145.95 and -75.05
- B. 25.05 and 154.25
- C. -35.05 and 164.95
- D. -181.55 and 18.45
Answer: D
NEW QUESTION 622
Section C (4 Mark)
Dyder System is a full-service truck leasing, maintenance, and rental firm. The following are selected numbers from the financial statements for 1992 and 1993 (in millions).
The firm had capital expenditures of Rs800 million in 1992 and Rs850 million in 1993. The working capital in
1991 was Rs34.8 million, and the total debt outstanding in 1991 was Rs1.75 billion. There were 77 million shares outstanding, trading at Rs29 per share.
Estimate the cash flows to the firm in 1992 and 1993(in Rs Millions)
- A. (139.75) and 534.34
- B. 139.75 and (349.95)
- C. (139.75) and 349.95
- D. -84.20 and 251
Answer: C
NEW QUESTION 623
Section C (4 Mark)
Read the senario and answer to the question.
Keshav purchased a Health Insurance. The policy has a calendar-year deductible of Rs. 500 and 80:20 as coinsurance. Keshav was hospitalized with a covered illness on January 23rd 2009. This hospitalization was his first claim under the said policy for the calendar year. His covered medical expenses were Rs. 20,500. How much of this amount will the insurer pay and how much will Keshav be required to pay to the Hospital?
- A. The insurer will pay Rs. 15,500 and Keshav will pay Rs. 4,500
- B. The insurer will pay Rs. 20,500 and Keshav will pay Rs. Nil
- C. The insurer will pay Rs. 20,000 and Keshav will pay Rs. 500
- D. The insurer will pay Rs. 16,500 and Keshav will pay Rs. 3,500
Answer: C
NEW QUESTION 624
Section B (2 Mark)
Which of the above statements is/are correct?
- A. (ii) only
- B. (i) and (ii) both are correct
- C. Both are incorrect
- D. (i) only
Answer: C
NEW QUESTION 625
Section A (1 Mark)
The covariance of the market returns with the stocks returns is 0.008. The standard deviation of the market is
8% and standard deviation of stock's return is 11%. What is the correlation coefficient between stocks and market returns?
- A. 0.5
- B. 0
- C. 0.91
- D. 1.25
Answer: C
NEW QUESTION 626
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