aafm cwm-level-2 practice test

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

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

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

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

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

• A. Economic analysis
• B. Industry analysis
• C. Company analysis
• D. Technical analysis

Section A (1 Mark)
Which of the following services are related to the field of Real Estate?

• A. Appraisal and Brokerages
• B. Property Development
• C. Property management & Relocation service
• D. All of the above

Section A (1 Mark)
A type of investor who is willing to risk his own capital and give up security to gain wealth is known
as:

• A. Active Accumulator
• B. Independent Individualist
• C. Friendly Follower
• D. Passive Preserver

Section A (1 Mark)
A(n) _________________________ occurs when two banks agree to exchange a portion or all of the
loan repayments of their customers.

• A. credit option
• B. standby letter of credit
• C. credit linked note
• D. credit swap

Section A (1 Mark)
Onshore wealth management involves ____________

• A. Suggesting products and services available across the globe
• B. Suggesting products and services available within the client’s country of residence
• C. Suggesting products and services available outside the client’s country of residence
• D. None of the above

Section B (2 Mark)
Ram and Mrs. Ram hold 20% and 30% equity shares in Anand Ltd. respectively. They are employed in
Anand Ltd. (monthly salary being Rs.20000 and Rs. 30000 respectively) without any technical /
professional qualification.
Other incomes of Ram and Mrs. Ram are Rs. 70000 and Rs. 100000 respectively. The net income of
Ram and Mrs. Ram for the assessment year 2013-14 shall be.

• A. Rs. 310000 and Rs. 460000 of Mr. Ram and Mrs. Ram respectively
• B. Rs. 460000 and Rs. 310000 of Mr. Ram and Mrs. Ram respectively
• C. Rs. 70000 and Rs. 700000 of Mr. Ram and Mrs. Ram respectively
• D. Rs. 700000 and Rs. 70000 of Mr. Ram and Mrs. Ram respectively