2021 Valid CWM_LEVEL_2 Real Exam Questions (Updated) 100% Dumps & Practice Exam
[UPDATED 2021] AAFM CWM_LEVEL_2 Questions Prepare with Free Demo of PDF
NEW QUESTION 23
Section A (1 Mark)
Total current assets of a company are Rs.960 lakh while the current liabilities (other than bank borrowings) are Rs.300 lakh. If the company borrowed Rs.350 lakh, what will be the amounts of Maximum Permissible Bank Finance (MPBF) under the (method I) of the Tandon committee recommendations?
- A. Rs. 500 lakh
- B. Rs. 505 lakh
- C. Rs. 495 lakh
- D. Rs. 510 lakh
Answer: C
NEW QUESTION 24
Section C (4 Mark)
Which of the following statements is/are correct?
- A. I and II
- B. I ,II and IV
- C. All of the Above
- D. III and IV
Answer: B
NEW QUESTION 25
Section B (2 Mark)
Risk to bondholders comes from
- A. I and II
- B. All of the above
- C. I and III
- D. II and III
Answer: B
NEW QUESTION 26
Section B (2 Mark)
Mrs. Sharma, a 40-year-old widow, has an 8-year-old son. Her current savings are not adequate to provide for her son's post graduate studies, however she will be able to save for it by the time he finishes graduation i.e.
when he is 20 years old. Mortality tables indicate that her life expectancy is another 30 years.
Which one of the following is true?
- A. She does not need to insure her life
- B. She needs to insure her life for 30 years
- C. She needs to insure her son's life for 30 years
- D. She needs to insure her life for 12 years
Answer: D
NEW QUESTION 27
Section A (1 Mark)
Tax exemption limit for the lump sum received towards Leave encashment on retirement is at
_______________
- A. Rs. 2.4 lacs
- B. Rs. 3.5 lacs
- C. Rs. 3 lacs
- D. Rs. 2 lacs
Answer: C
NEW QUESTION 28
Section C (4 Mark)
OHM Corporation, an environmental service provider, had revenues of Rs209 million in 1992 and reported losses of Rs3.1 million. It had earnings before interest and taxes of Rs12.5 million in 1992, and had debt outstanding of Rs109 million (in market value terms). There are 15.9 million shares outstanding, trading at Rs11 per share. The pre-tax interest rate on debt owed by the firm is 8.5%, and the stock has a beta of 1.15.
The firm's EBIT is expected to increase 10% a year from 1993 to 1996, after which the growth rate is expected to drop to 4% in the long term. Capital expenditures will be offset by depreciation, and working capital needs are negligible. (The corporate tax rate is 40%, and the Risk free rate is 7%.) Estimate the value of the firm.
- A. Rs189.20
- B. Rs 155.60
- C. Rs175.45
- D. Rs 194.80
Answer: B
NEW QUESTION 29
Section C (4 Mark)
Navin Corporation, a manufacturer of do-it-yourself hardware and housewares, reported earnings per share of Rs2.10 in 1993, on which it paid dividends per share of Rs0.69. Earnings are expected to grow 15% a year from 1994 to 1998, during which period the dividend payout ratio is expected to remain unchanged. After
1998, the earnings growth rate is expected to drop to a stable 6%, and the payout ratio is expected to increase to 65% of earnings. The firm has a beta of 1.40 currently, and it is expected to have a beta of 1.10 after 1998.
The Risk Free rate is 6.25%.
What is the value of the stock, using the two-stage dividend discount model?
- A. Rs 30.06
- B. Rs 25.15
- C. Rs27.59
- D. Rs 27.75
Answer: C
NEW QUESTION 30
Section A (1 Mark)
Creation of an Estate Plan normally occurs during __________
- A. None of the above
- B. Sunset stage
- C. Conservation Stage
- D. Distribution stage
Answer: D
NEW QUESTION 31
Section C (4 Mark)
Pacific Asia reported net income of Rs770 million in 1993, after interest expenses of Rs320 million. (The corporate tax rate was 36%.) It reported depreciation of Rs960 million in that year, and capital spending was Rs1.2 billion. The firm also had Rs4 billion in debt outstanding on the books, rated AA (carrying a yield to maturity of 8%), trading at par (up from Rs3.8 billion at the end of 1992). The beta of the stock is 1.05, and there were 200 million shares outstanding (trading at Rs60 per share), with a book value of Rs5 billion. Pacific Asia paid 40% of its earnings as dividends and working capital requirements are negligible. (The Risk Free rate is 7%.) Estimate the free cash flow to the firm in 1993.
- A. Rs 161.75
- B. Rs 734.80
- C. Rs785.45
- D. Rs 689.20
Answer: B
NEW QUESTION 32
Section B (2 Mark)
If Raman Industries Ltd. share price is Rs.50 and its current dividend is Rs.5/- per share which is growing at 7 percent rate per year, determine its required return?
- A. 17.25 percent
- B. 4.10 percent
- C. 17.70 percent
- D. 18.70 percent
Answer: C
NEW QUESTION 33
Section C (4 Mark)
A stock ABC Ltd. is trading at Rs. 450. Mr. XYZ is bullish on the stock. But does not want to invest Rs. 450.
He does a Long Combo. He sells a Put option with a strike price Rs. 400 at a premium of Rs. 1.00 and buys a Call Option with a strike price of Rs. 500 at a premium of Rs. 2.
What would be the Net Payoff of the Strategy?
* If ABC Ltd closes at 625
* If ABC Ltd closes at 328
- A. -114 and 95
- B. -144 and 105
- C. 124 and -73
- D. 320 and 270
Answer: C
NEW QUESTION 34
Section A (1 Mark)
______________are bonds issued by governments that pledge their "full faith and credit," including tax revenues, to repayment in US.
- A. Expenditure Bonds
- B. Revenue Bonds
- C. General Obligation Bonds
- D. General Revenue Bonds
Answer: C
NEW QUESTION 35
Section B (2 Mark)
Mr. Gupta has got his stock insured against fire for Rs5,00,000/- ,during the year he lost the stock in his ware house for Rs. 4,00,000/-. The surveyor from insurance company gave his report that at the time of fire the stock in the ware house had value 6,00,000/- Calculate what amount Mr. Gupta will receive from the insurance company.
- A. 5,00,000/-
- B. 3,33,333/-
- C. None of the above
- D. 4,00,000/-
Answer: B
NEW QUESTION 36
Section A (1 Mark)
Which ONE of the following in not the requirement for managing customer?
- A. Measurement of least growth potential of product or customer
- B. Need and want of customers
- C. Knowing which customers will be advocates and supporters
- D. Measurement of most or least profitability of customer or product
Answer: A
NEW QUESTION 37
Section A (1 Mark)
If a portfolio manager consistently obtains a high Sharpe measure, the manager's forecasting ability
__________.
- A. is below average
- B. None of the Above
- C. is above average
- D. is average
Answer: C
NEW QUESTION 38
Section C (4 Mark)
Which of the following statements are correct?
- A. I and II
- B. All of the Above
- C. I and III
- D. III and IV
Answer: B
NEW QUESTION 39
Section B (2 Mark)
A constant proportion portfolio insurance (CPPI) policy calls for:
- A. Selling a constant number of shares of a stock every month
- B. Selling stocks as they fall and buying stocks as they rise
- C. Buying a constant number of shares of a stock every month
- D. Buying stocks as they fall and selling stocks as they rise
Answer: B
NEW QUESTION 40
Section A (1 Mark)
Income received in India in previous year is taxable in the hands of:
- A. Resident;
- B. Non ordinarily resident;
- C. All above.
- D. Non-Resident;
Answer: C
NEW QUESTION 41
Section C (4 Mark)
Your broker recommends that you purchase XYZ Inc. at Rs.60. The stock pays a Rs.2.40 dividend which (like its per share earnings) is expected to grow annually at 8 percent. If you want to earn 12 percent on your funds, is this a good buy?
- A. Price of the stock is overvalued, so should not buy
- B. Price of the stock is undervalued, so should not buy
- C. Price of the stock is overvalued, so should buy
- D. Price of the stock is undervalued, so should buy
Answer: D
NEW QUESTION 42
Section A (1 Mark)
In a life insurance contract, offer refers to
- A. Proposer's application form for insurance
- B. Original policy bond
- C. Proposer paying the first premium
- D. Company brochure duly authenticated
Answer: A
NEW QUESTION 43
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