AAFM Chartered Wealth Manager (CWM) Certification Level II Examination (CWM_LEVEL_2) Free Practice Test
Question 1
Section B (2 Mark)
Suppose the price of a share of CAS stock is Rs500. An April call option on CAS stock has a premium of Rs5 and an exercise price of Rs500. Ignoring commissions, the holder of the call option will earn a profit if the price of the share
Suppose the price of a share of CAS stock is Rs500. An April call option on CAS stock has a premium of Rs5 and an exercise price of Rs500. Ignoring commissions, the holder of the call option will earn a profit if the price of the share
Correct Answer: C
Question 2
Section B (2 Mark)
You are estimating the value of a small office building. Suppose the estimated NOI for the first year of operations is Rs100,000. a. If you expect that NOI will remain constant at Rs100,000 over the next 50 years and that the office building will have no value at the end of 50 years, what is the present value of the building assuming a 12.2% discount rate?
You are estimating the value of a small office building. Suppose the estimated NOI for the first year of operations is Rs100,000. a. If you expect that NOI will remain constant at Rs100,000 over the next 50 years and that the office building will have no value at the end of 50 years, what is the present value of the building assuming a 12.2% discount rate?
Correct Answer: D
Question 3
Section A (1 Mark)
In Working Capital Finance, what should be the minimum current ratio the borrower needs to ensure the compliance under the first method of lending.
In Working Capital Finance, what should be the minimum current ratio the borrower needs to ensure the compliance under the first method of lending.
Correct Answer: D
Question 4
Section A (1 Mark)
Another name for open-end credit is:
Another name for open-end credit is:
Correct Answer: B
Question 5
Section B (2 Mark)
The risk-free return is 9 percent and the expected return on a market portfolio is 12 percent. If the required return on a stock is 14 percent, what is its beta?
The risk-free return is 9 percent and the expected return on a market portfolio is 12 percent. If the required return on a stock is 14 percent, what is its beta?
Correct Answer: A
Question 6
Section A (1 Mark)
The quantum of deduction allowed u/s 80U is:
The quantum of deduction allowed u/s 80U is:
Correct Answer: C
Question 7
Section C (4 Mark)
Management has recently announced that expected dividends for the next three years will be as follows:
For the subsequent years, management expects the dividend to grow at 5% annually. If the risk-free rate is
4.30%, the return on the market is 10.30% and the firm's beta is 1.40. What is the maximum price that you should pay for this stock?
Management has recently announced that expected dividends for the next three years will be as follows:
For the subsequent years, management expects the dividend to grow at 5% annually. If the risk-free rate is
4.30%, the return on the market is 10.30% and the firm's beta is 1.40. What is the maximum price that you should pay for this stock?
Correct Answer: A
Question 8
Section B (2 Mark)
A perspective on decision making based on the assumption that people typically show risk aversion; hence, when making decisions they view whatever losses may be involved as more painful than equivalent gains are desirable. We have an irrational tendency to be less willing to gamble with profits than with losses.
A perspective on decision making based on the assumption that people typically show risk aversion; hence, when making decisions they view whatever losses may be involved as more painful than equivalent gains are desirable. We have an irrational tendency to be less willing to gamble with profits than with losses.
Correct Answer: A
Question 9
Section B (2 Mark)
Which of the following statement is/are correct?
Which of the following statement is/are correct?
Correct Answer: B
Question 10
Section A (1 Mark)
An Agreement between the tenant and the landlord for the right to use the property for a specified period of time is known as ____________.
An Agreement between the tenant and the landlord for the right to use the property for a specified period of time is known as ____________.
Correct Answer: C
Question 11
Section A (1 Mark)
The long term use is 120% of long term source. This indicates the unit has
The long term use is 120% of long term source. This indicates the unit has
Correct Answer: D
Question 12
Section B (2 Mark)
In the calculation of rates of return on common stock, dividends are _______ and capital gains are _____.
In the calculation of rates of return on common stock, dividends are _______ and capital gains are _____.
Correct Answer: C
Question 13
Section A (1 Mark)
The way to reduce tax liability by taking full advantage provided by the Act is
The way to reduce tax liability by taking full advantage provided by the Act is
Correct Answer: C
Question 14
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?
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?
Correct Answer: C
Question 15
Section A (1 Mark)
In US which group is unlikely to support tax limitations?
In US which group is unlikely to support tax limitations?
Correct Answer: A