CWM_LEVEL_2 Exam Dumps - Chartered Wealth Manager (CWM) Certification Level II Examination

Section C (4 Mark)

Read the senario and answer to the question.

Raman’s company has made plans for the next year for a new project. It is estimated that the company will employ total assets of Rs. 900 lakh, 75% of the assets being financed by borrowed capital at an interest cost of 6% per year. The direct costs are estimated at Rs. 530 lakh. All other operating expenses are estimated at Rs. 95 lakh. The goods will be sold to customers at 150% of the direct costs. Income tax rate is assumed to be 30%. Calculate net profit margin and return on owners’ equity.

Section B (2 Mark)

Calculate the beta on a portfolio from the following data:

Section C (4 Mark)

Mr. Sushobhan Adhikari, 56 years old, employee of Mega India Ltd, receives the following salary and perquisites from his employer during the previous year 2007–08.

A rent-free furnished house in Patna (rent of unfurnished house paid by employer- Rs. 84,000, rent of furniture Rs. 18,000, free services of a gardener (salary-Rs. 4,000), free services of cook (salary-Rs. 3,600), free services of watchman (salary-Rs. 900). He owns a small house at Patna.

Mr. Adhikari makes the following payments and investments during the year:

Mr. Adhikari comes to Mr. Gupta, CWM®, in September-2008 for developing a wealth plan to fulfill his financial goals. Mr. Adhikari will retire on 31st December, 2008 after completing 28 years of service. He is expecting a growth of Rs. 1,500 in his basic pay in the last year of his employment. The company is expecting a 5% growth every year in its turnover. His daughter Pallavi has completed her education and his main liability is the amount he may have to spend for her marriage. On his retirement he is expected to receive following amount:

He also has also informed to the planner following his other assets and investments:

He has given his Kolkata Flat on 12,500 p.m. rent. Municipal value of the property is Rs. 1,45,000, fair rent is Rs. 1,60,000 and standard rent is 1,40,000. Municipal tax paid by him are as follows:

In July, 2008 rent is increased from Rs. 11,500 to Rs. 12,500 pm with effect from 01/04/2007. Due to some dispute rent was not received in 2007–08 but all arrears of rent till date are paid on July 1, 2008. Maximum eligible amount of PPF contribution deposited in March, 2008.

His actual expenses before retirement are Rs. 23,500 per month.

Main goals of Mr. Adhikari:

●To provide for his daughter’s marriage

●Ensuring that his family is protected financially in the event of any mishap

●Minimize tax burden

●Establish an investment portfolio that gives high returns over long term

Assumptions:

●Mr. Adhikari needs to provide for himself and his family till he is 75.

●Inflation rate after retirement to be 4%

●Monthly expenses after retirement will be 15% less than before retirement

After detailed discussion, Mr. Gupta, CWM®, has suggested a revision in the portfolio as below to be implemented from October, 2008.

Section A (1 Mark)

Independent Individualist has __________ risk tolerance

Section A (1 Mark)

Conventional theories presume that investors ____________ and behavioral finance presumes that they ____________.

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?

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.

Section A (1 Mark)

In US which of the following does not count as an itemized deduction on income tax?