aafm CWM-LEVEL-2 Exam Questions
Questions for the CWM-LEVEL-2 were updated on : Nov 21 ,2025
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Question 1
Section C (4 Mark)
Read the senario and answer to the question.
Which types(s) of investment(s), would be consistent with their retirement goal?
- A. (I) only
- B. (I) and (IV) only
- C. (I) and (III) only
- D. (II) and (IV) only
Answer:
C
Question 2
Section C (4 Mark)
Read the senario and answer to the question.
Which one of the following statements most accurately describes the risk exposure of the Shankers’
portfolio?
- A. The portfolio has excessive market risk.
- B. The portfolio should be unaffected by changes in interest rates.
- C. The portfolio contains an excessive level of business risk.
- D. The portfolio contains excessive purchasing power risk.
Answer:
D
Question 3
Section C (4 Mark)
Read the senario and answer to the question.
Neeraj’s portfolio consist shares of company X Ltd. which is paying a dividend of Rs. 2 per share. The
dividend is expected to grow @15% annual rate for 3 years, then @10% for the next 3 years, after
which it is expected to grow @5% forever. What among the following would be your advice to Neeraj
in case the market value of the share is Rs. 85? Assume capitalization rate to be 9% per annum
- A. Keep the share as the market price is higher than the current value of the share.
- B. Sell the share as the market price is lower than the current value of the share
- C. Buy more shares as market price is lower than current value
- D. Sell the shares as the market price is higher than the current value of the shares
Answer:
D
Question 4
Section C (4 Mark)
Read the senario and answer to the question.
Calculate the Solvency ratio?
- A. 1.19
- B. 2.07
- C. 3.06
- D. 3.02
Answer:
A
Question 5
Section C (4 Mark)
Read the senario and answer to the question.
Raman is considering the purchase of a office building and, as part of his analysis, from the following
given data calculate the appraised value of the property using the Income Approach?
- A. Rs. 19,50,000
- B. Rs. 19,25,750
- C. Rs. 19,15,500
- D. Rs. 18,75,500
Answer:
A
Question 6
Section C (4 Mark)
Read the senario and answer to the question.
Assume the following additional facts:
The Shankers have purchased a homeowner’s policy (comprehensive) covering 100% of the
replacement cost of their residence. This policy has a Rs. 500 deductible. Also, they have purchased a
disability income policy with a 30-day elimination period and an any-occupation definition of
disability.
What actions should the Shankers consider in order to improve the quality of the insurance program
described above?
- A. (I) only
- B. (I) and (IV) only
- C. (I) and (III) only
- D. (II) and (IV) only
Answer:
B
Question 7
Section C (4 Mark)
Read the senario and answer to the question.
Mr. Bhatia owns a Maruti Wagonr with a monthly EMI of Rs. 6,312. The above loan will be
completely repaid by August 2008. Mr. Bhatia planning to purchase a new car worth of Rs. 15 lakh.
For this he has to take a full value loan of the car with 9% interest for 5 years. But his present car is in
good condition and life of this car is approximately another 5 years repairs and maintenance cost are
minimum. If he postpones his car purchasing plan now and deposit the same EMI outflow required
for new car into an SIP with a minimum 15% yield for the next five years, then calculate the fund he
can accumulate?
- A. Rs. 23.66 lacs
- B. Rs. 27.58 lacs
- C. Rs. 23.49 lacs
- D. Rs. 30.47 lacs
Answer:
B
Question 8
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?
- A. House loan-321 month, Car Loan-129 months
- B. House loan-540 month, Car Loan-318 months
- C. House loan-342 month, Car Loan-249 months
- D. House loan-432 month, Car Loan-429 months
Answer:
B
Question 9
Section C (4 Mark)
Read the senario and answer to the question.
Harish wants a monthly investment to achieve the goal of his children's higher education. For
accumulation of fund you recommend Harish to invest in an investment vehicle which invests in the
ratio of 20:80 in Debt and Equity. If Harish starts investing from 1st Dec 2010, what approximate
amount should he set aside every month for each child to achieve the goal? Harish maintains
separate investment accounts for Chirag and Vishesh and invests till they individually turn 21 years of
age.
- A. Rs. 8,400 and Rs. 3,760 respectively
- B. Rs. 8,100 and Rs. 3,640 respectively
- C. Rs. 9,540 and Rs. 4,240 respectively
- D. Rs. 7,850 and Rs. 3,950 respectively
Answer:
A
Question 10
Section C (4 Mark)
Read the senario and answer to the question.
Mr. Saxena is planning to visit USA for the very first time in his carrier to promote software of his
company and is expected to stay long. He wants to plan his journey in such a manner so that he can
get maximum tax benefits in the FY 2007–08 from the residential status point of view. What is the
latest date when he can afford to leave India & earn status of an NRI to get maximum tax benefits in
assessment year 2008–09?
- A. On 12-10-2007
- B. On 28-09-2007
- C. On 01-10-2007
- D. On 22-09-2007
Answer:
B
Question 11
Section C (4 Mark)
Read the senario and answer to the question.
If Mrs. Deepika, a conservative investor, has Rs. 50, lakhs today that she could invest for the next
three months in a three month bank CD or in a stock .The bank CD offers a guaranteed return 6 %
over the three-month period. Alternatively she thinks the price of the stock will rise by 5% over the
next months. She is confused in taking the decision. Guide her in trade off between return and risk so
that she makes a decision in choosing investments?
- A. As the return on stock is higher in next 3 months she should decide to invest in stock.
- B. The future price of the stock is uncertain, her return from investing in this stock is also uncertain. The return could be less than 5% and might be even negative. But in Bank CD return is guaranteed. So as a conservative investor she should decide of invest in the Bank CD.
- C. For making a balance trade off between return and risk she should invest 50% in each investment
- D. Option B and C
Answer:
B
Question 12
Section C (4 Mark)
Read the senario and answer to the question.
Portfolio A had a return of 12% in the previous year, while the market had an average return of 10%.
The standard deviation of the portfolio was calculated to be 20%, while the standard deviation of the
market was 15% over the same time period. If the correlation between the portfolio and the market
is 0.8, what is the Beta of the portfolio A?
- A. 0.94
- B. 1.07
- C. 1.31
- D. 1.91
Answer:
B
Question 13
Section C (4 Mark)
Read the senario and answer to the question.
Mr. Adhikari bought agricultural land in Patna in 94-95 for 1.75 lakh. That land was vacant for last so
many years. But due to establishing a “Commercial Processing Zone” the Bihar Government has
issued a notice for compulsorily acquirement on 12/08/2003. In 2006 government has fixed
compensation for Rs. 6.50 lakhs and acquired it on 09/01/2006. Rs. 2 lakh was received by Mr.
Adhikari on 07/03/2006. Mr. Adhikari and others were not satisfied with the compensation and file a
suit in the court.
Balance compensation paid by Bihar Government on 08/10/2008. The compensation is enhanced by
another 1.50 lakhs by the Bihar Government which paid by the Government on
11/12/2008.Compute Capital Gain tax in the hands of Mr. Adhikari for the assessment year 2009–10.
- A. The compensation amount is taxable @ 10 % with indexation benefit and enhanced compensation is exempt as per section 10(37)
- B. The compensation amount is taxable @ 20 % without indexation benefit and enhanced compensation is exempt as per section 10(37).
- C. The compensation amount along with enhanced compensation of Rs. 1.50 lakhs shall be exempt as per section 10(37) because the agricultural land was acquired by the Government and as compensation is received after 31/03/2004.
- D. Compensation is exempted because the agricultural land was acquired by the Bihar Government
Answer:
C
Question 14
Section C (4 Mark)
Read the senario and answer to the question.
During identification of new business opportunities, one of Harish’s friends Shekhar has offered him
a business proposal. In this proposal a partnership firm consisting of two partners, Harish and
Shekhar, shall take the franchise of a company which is a reputed brand in the field of pathology lab
in which their investment and profit sharing ratio shall be equal.
Franchise rights shall be valid for 5 years and the project requires an upfront investment of Rs. 25
lakh for required infrastructure. The franchisee agreement has an option that the company can take
over the franchisee after 5 years by charging depreciation @15% p.a. on straight line basis.
The projected profits from the firm are as follows:
Harish wants to know what IRR he will earn on his investment from this project ? (Please ignore taxes
and assuming no additional investment is made during this five year period)
- A. 8.20%
- B. 5.17%
- C. 12.27%
- D. 7.82%
Answer:
A
Question 15
Section C (4 Mark)
Read the senario and answer to the question.
Saxena is considering an attractive investment proposal in which he is being offered two different
cash flow choices at the same initial investment of Rs. 2,00,000. According to you which one should
he opt for assuming Risk Free Interest Rate is the required rate of return?
- A. Plan A should be opted since it has a higher Future Value.
- B. Plan B should be opted since it has a lower Present Value.
- C. Plan B should be opted since it has a higher Present Value.
- D. Plan B should be opted since it has a lower Future Value.
Answer:
C