Started on Thursday, 25 August 2011, 07:03 PM Completed Thursday, 25 August 2011, on 07:32 PM Time taken 28 mins 44 secs Marks

Grade 4/20 20 out of a maximum of 100 (20%)

Chapter feedback Please revise the following chapters: Wealth Management Marks: 1

Question 1

A life insurance company has guaranteed a payment of INR 9 Million to a pension fund, 5 years from now. If the Insurance company can invest today at 6.75%, how much must it invest to meet its obligation? Choose one answer. a. INR 6.49 mn b. INR 6.8 mn c. INR 12.47 mn d. INR 5.84 mn Incorrect Marks for this submission: 0/1. Question 2

Marks: 1 Which of the following statements is true? Choose one answer. a. Fundamental analysis is analysing trends based on history. b. Technical analysis is analysing trends based on history c. Technical analysis is analysing trends based on economic parameters and events. d. None of the above Correct Marks for this submission: 1/1. Question 3 Marks: 1 Which of the following provides the most diversification of risk? Choose one answer. a. You put INR 2000 into SBI fixed deposits, INR 2500 into HDFC fixed deposits and INR 3000 into ICICI fixed deposits b. You invest in Indian stocks, U.S. stocks and European stocks c. An investor buys INR 5000 worth of two technology companies d. An investor invests INR 5000 in two technology sector companies Incorrect Marks for this submission: 0/1. Question 4 Marks: 1 Rashmi is due to retire and has savings of INR 5,000,000. The rate of return on an investment made today gives 6% p.a. What will be the monthly annuity she will receive if her life expectancy is 25 years post retirement? Choose one answer.

a. INR 30145 b. INR 17215 c. INR 32215 d. INR 28319 Incorrect Marks for this submission: 0/1. Question 5 Marks: 1 ABC Mutual Fund launches a 15 month FMP on Jan 16, 2011. The prevailing market yield is 10% Your client has invested INR 10,000 in the FMP. Assume that the inflation index in financial year 20010-11 is 100. Also assume that the inflation in the next two years is 6% p.a. and hence the inflation cost index will rise by 6% for each of the years. With the indexation benefits, what is the tax amount your client has to pay with tax rate at 20%? Choose one answer. a. INR 25.80

b. INR 2.8 c. INR 14 d. INR 11250 Incorrect Marks for this submission: 0/1. Question 6 Marks: 1 If you have a Straddle strategy of a purchase of a 3 month INR 165 strike put and call, at INR 5 and INR 3 respectively, what are the break-even points?

Choose one answer. a. INR 165 and INR 170 b. INR 160 and INR 168 c. INR 157 and INR 173 d. None of the above Incorrect Marks for this submission: 0/1. Question 7 Marks: 1 What type of fund would you recommend to an investor who wants to maximise returns with minimum risk, and doesn't have the appetite for credit risk at all? Choose one answer. a. Income Fund b. Money Market Fund c. Growth Fund d. Gilt Fund Incorrect Marks for this submission: 0/1. Question 8 Marks: 1 Calculate the Sharpe ratio for the portfolio below? The risk free rate is 4% p.a. Initial Investment Jan 1'11 - INR 20,00,000, Jan 31'11 - INR 24,00,000

Feb 28'11 - INR 19,00,000 March 31'11 - INR 26,00,000 Choose one answer. a. 0.2698

b. 1.42 c. 1.96 d. 1.36 Incorrect Marks for this submission: 0/1. Question 9 Marks: 1 If you bought a call option at INR 30 and paid a premium of INR 2, you will exercise the option when Choose one answer. a. Maturity price < INR 28 b. Maturity price > INR 32 c. Maturity price > INR 30 d. Maturity price > INR 31 Incorrect Marks for this submission: 0/1. Question 10 Marks: 1 Dhoni has INR 1,000,000 to invest. His Asset allocation strategy based on his risk profile is putting 50% in equity funds, 30% in bond funds and 20% in money market

funds. 1 year from now , the equity fund gave a return of -5%, bond fund a return of 20%,money market funds 10%. How has his asset allocation changed? Choose one answer. a. 45%, 50%, 30% b. 45%, 34%, 21% c. 55%, 28%, 17% d. None of the above Incorrect Marks for this submission: 0/1. Question 11 Marks: 1 Given below are the details of investments made by your client Sahil in a mutual fund scheme on different dates. He redeemed all his investments from the scheme on 30 June 11. What is the rate of return he earned on his investments during these 2 months if he got INR 78000 at the end? Deposit Deposit Deposit Deposit INR INR INR INR 50,000 || Date - 30 Apr; 5,000 || Date - 7 May; 7,000 || Date - 18 May; 12,000 || Date - 15 June

Choose one answer. a. 30% b. 45.12%

c. 5.4% d. 32.4% Incorrect

Marks for this submission: 0/1. Question 12 Marks: 1 All of the following are true concerning the Yield-to-Maturity (YTM) of a bond EXCEPT: Choose one answer. a. YTM is the promised rate of return an investor will receive from a bond at the current market price if held to maturity b. It is the rate of return for the same bond for its residual maturity c. YTM assumes that the investor reinvests all coupons received from a bond at a rate equal to the computed YTM d. None of the above Incorrect Marks for this submission: 0/1. Question 13 Marks: 1 Iridium Mutual fund had assets of INR 25,000,000(incl. Cash) and liabilities of INR 10,000,000. The mutual fund had incurred expenses of INR 50,000 and received income by way of interest and dividends of INR 100,000. There are 1,000,000 shares outstanding as of this date. The NAV of the mutual fund is: Choose one answer. a. INR 14.95

b. INR 15 c. INR 15.05 d. INR 15.10 Incorrect

Marks for this submission: 0/1. Question 14 Marks: 1 Compute the CAGR for the portfolio over the period ? Date - Apr 15 2009 || Market Value - 50000 Date - Apr 15 2010 || Market Value - 40000 Date - Apr 15 2011 || Market Value - 70000 Date - Apr 15 2012 || Market Value - 80000 Choose one answer. a. 3.10%

b. 20% c. 16.96% d. 17.23% Correct Marks for this submission: 1/1. Question 15 Marks: 1 Your client has INR 10 lakh which he wishes to invest for his daughter's education. She is 8 years old now. He wants to have INR 20 lakh by the time she's 18. He is confused as to the minimum rate of return he needs on his investment, so that he achieves his goal. Can you help him? Choose one answer. a. 7.17% b. 7.81% c. 7.23%

d. 7.78% Correct Marks for this submission: 1/1. Question 16 Marks: 1 Samar has a life insurance policy. He received INR 500,000 after the term of the policy. Which type of insurance policy is it? Choose one answer. a. Level Term Insurance b. Decreasing Term Insurance c. Renewable Term Insurance d. None of the above Correct Marks for this submission: 1/1. Question 17 Marks: 1 A client wishes to invest in stocks that move in tandem with the economy. Which category is he talking about? Choose one answer. a. Growth stocks b. Momentum stocks c. Defensive stocks

d. Cyclical stocks Incorrect Marks for this submission: 0/1. Question 18 Marks: 1 AXN purchases 1000 shares of Sun TV at INR 25 per share. After 15 months AXN sells the shares at INR 45. If there is a 1% brokerage on both purchase and sale transactions, what is the annualized return for AXN ? Choose one answer. a. 61.15%

b. 64% c. 80% d. 76.43% Incorrect Marks for this submission: 0/1. Question 19 Marks: 1 David has a traditional insurance policy since the last 3 years. He has paid a premium of INR 50,000 every year. He is in urgent need of money, so he wants to surrender his insurance policy. How much money will David get? a. Amount deducted through for risk cover by insurance company (out of premium paid) every year = INR 10,000 b. Loan taken by David at the end of 2nd year = INR 25,000 c. In last 3 years, income earned on investments of premium =INR 6,000 d. Surrender charges = INR 5,000 Choose one answer. a. INR 69,000

b. INR 96,000 c. INR 71,000 d. INR 91,000 Incorrect Marks for this submission: 0/1. Question 20 Marks: 1 You are saving up to buy your dream car, and can invest INR 1,50,000 @ 6% p.a., each year, starting today. If the following are the cars available, which one would you be able to buy at the start of Year 4? Ford Ikon Ultra: INR 7.35 lakh Honda City: INR 6.85 lakh Hyundai Accent: INR 6.55 lakh Choose one answer. a. None, as Future Value is INR 506,192 b. Ford Ikon, as Future Value is INR 735,000 c. Honda City, as Future Value is INR 696,000 d. Hyundai Accent, as Future Value is INR 656,192 Incorrect Marks for this submission: 0/1