CWM_LEVEL_2 Practice Online

Question 1

Section A (1 Mark)

An insured becomes entitled for getting No Claim Bonus only at the renewal of a policy after the expiry of the full duration of _________ months.

A : 6

B : 9

C : 3

D : 12

Answer: D

Question 2

Section A (1 Mark)

An arbitrage opportunity exists if an investor can construct a __________ investment portfolio that will yield a sure profit.

A : Positive

B : Negative

C : Zero

D : All of the above

Answer: C

Question 3

Section C (4 Mark)

A rate of interest of 10% semi-annual compounded quarterly would be equal to -------------------- % per annum compounded annually.

A : 20% per Annum Compounded Annually

B : 21.55% per Annum Compounded Annually

C : 20.50% per Annum Compounded Annually

D : 21% per Annum Compounded Annually

Answer: B

Question 4

Section B (2 Mark)

The assumptions concerning the shape of utility functions of investors differ between conventional theory and prospect theory. Conventional theory assumes that utility functions are __________ whereas prospect theory assumes that utility functions are __________.

A : Concave and defined in terms of wealth; s-shaped (convex to losses and concave to gains) and defined in terms of loses relative to current wealth

B : Convex and defined loses relative to current wealth; s-shaped (convex to losses and concave to gains) and defined in terms of loses relative to current wealth

C : S-shaped (convex to losses and concave to gains) and defined in terms of loses relative to current wealth; concave and defined in terms of wealth

D : S-shaped (convex to losses and concave to gains) and defined in terms of wealth; concave and defined in terms of loses relative to current wealth

Answer: A

Question 5

Section C (4 Mark)

Mr. XYZ buys a Nifty Call with a Strike price Rs. 4100 at a premium of Rs. 170.45 and he sells a Nifty Call option with a strike price Rs. 4400 at a premium of Rs. 35.40.

What would be the Net Payoff of the Strategy?

* if Nifty closes at 4200

* if Nifty closes at 5447

A : 145.95 and -75.05

B : -35.05 and 164.95

C : 145.85 and -65.50

D : 25.05 and 154.25

Answer: B

Name:	Chartered Wealth Manager (CWM) Certification Level II Examination
Exam Code:	CWM_LEVEL_2
Certification:	Chartered Wealth Manager
Vendor:	AAFM
Total Questions:	1265
Last Updated:	Apr 22, 2024

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