Mock Test - 1

25 Questions | Total Attempts: 190

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CPFA Quizzes & Trivia

This is a mock test based on CPFA


Questions and Answers
  • 1. 
    DevD pays a premium of Rs 12,000 annually for his medical insurance policy and Rs 17,000 for his father both through cash. What deduction would DevD get under the section 80D of the IT Act
    • A. 

      12000

    • B. 

      29000

    • C. 

      27000

    • D. 

      No Deduction

  • 2. 
    Immovable property must be held for minimum of  ________ years in order to qualify as a Long Term Capital Asset
    • A. 

      1

    • B. 

      2

    • C. 

      3

    • D. 

      4

  • 3. 
    Mutual Funds have to pay capital gains tax @ ---------- % on the profit on sale of equity shares.
    • A. 

      5%

    • B. 

      No Tax

    • C. 

      10% (without indexation)

    • D. 

      20 % (with Indexation)

  • 4. 
    Kuresh Salmadi is the nominee of existing PONSC investments of his mother Rira Nadia. Kuresh wants    to know in case these NSC’s are pledged to a bank to avail a loan. What impact will happen to the  nomination
    • A. 

      His nomination will stand still

    • B. 

      His nomination stands cancelled as soon as any pledge is made

    • C. 

      No pledge is permitted for NSC

    • D. 

      The decision will be under the discretion of the master of Post Office Concerned

  • 5. 
    Equity Linked Savings Schemes eligible for Sec. 80 C benefits have a lock-in period of ________ years
    • A. 

      2

    • B. 

      3

    • C. 

      4

    • D. 

      5

  • 6. 
    Which of the following costs best describes the cost of foregone income that results from making an economic decision to use funds to purchase a piece of equipment?
    • A. 

      Cost of Capital

    • B. 

      Fixed Cost

    • C. 

      Marginal Cost

    • D. 

      Opportunity Cost

  • 7. 
    If a new issue was offered to the public at 15 times earnings but the market was pricing similar shares at 19 times, this would be _____________
    • A. 

      Appalling proposition to the investor

    • B. 

      The investor cannot take a position

    • C. 

      An example of low gearing

    • D. 

      Bargain not to be missed

  • 8. 
    If a bond is selling at a premium
    • A. 

      Its coupon rate is higher market rate

    • B. 

      It is an attractive investment

    • C. 

      Its current yields is lower than the coupon rate

    • D. 

      Its realized compound yield will be less than the yields to maturity

  • 9. 
    Mr. Babitabh Achhan is a well established business man. His only daughter Kaishwaria is married to Tabishek Rai. Babitabh wants to include Tabishek as a member in his HUF. Is it possible?
    • A. 

      Yes

    • B. 

      Yes, If Tabishek’s father in law gives in writing and his mother in law approves it he can be included

    • C. 

      Yes but prior approval of IT department is to be taken

    • D. 

      No

  • 10. 
    The CAPM is a model that
    • A. 

      Determines the geometric return of a security

    • B. 

      Determines time-weighted return

    • C. 

      Explain return in terms of risk

    • D. 

      Explains systematic risk

  • 11. 
    Public Issue through the book building process is better than I.P.O at fixed price because__________
    • A. 

      High fixed price will result in under subscription leading to loss to the investor

    • B. 

      It helps the issuer to ascertain the exact price at which the investor is willing to subscribe

    • C. 

      Low fixed price will result in over subscription leading to loss to the issuer

    • D. 

      All of the above

  • 12. 
    The risk free return of Security A is 8%. In addition to it, you expect that the return on market would be 14%. The expected return of Security A with beta of 0.70 is
    • A. 

      12.2%.

    • B. 

      15.4%.

    • C. 

      17.8%.

    • D. 

      18.2%.

  • 13. 
    Company A has announced a 20% increase in net profit over the previous year. The stock price however fails to respond to the news and remains unchanged. This phenomenon reflects
    • A. 

      Weak form of market efficiency

    • B. 

      Semi-strong form of market efficiency

    • C. 

      Strong form of market efficiency

    • D. 

      Investors are selling on fact

  • 14. 
    Intervention by RBI in the money market through buying of government securities has resulted in MIBOR rates falling across the board. If a unit trust bond fund marks to market all its bonds, the price of the unit trust fund should _____________
    • A. 

      Remain unchanged

    • B. 

      Declare a dividend

    • C. 

      Appreciate

    • D. 

      Depreciate

  • 15. 
    Which of the following are major reasons for making real estate investments? I. Reasonably liquid. II. Comparatively higher leverage. III. Good hedge against inflation. IV. Higher capital gains.
    • A. 

      I, II

    • B. 

      II, III

    • C. 

      III, IV

    • D. 

      I, IV

  • 16. 
    The returns on Stock A and Stock B have a correlation coefficient of –1. When the price of Stock A appreciates by 12%, how will Stock B’s price perform?
    • A. 

      Appreciate by 12%.

    • B. 

      Depreciate by 12%

    • C. 

      Stay unchanged

    • D. 

      Depreciate by 6.0%.

  • 17. 
    For listing, the company must submit to------audited balance sheets for the past----years
    • A. 

      NSE;3

    • B. 

      SEBI;3

    • C. 

      CLB;2

    • D. 

      ROC;2

  • 18. 
    The Managing Director of Ms Prudent Corporate Ltd wants to float an IPO. He has come to know about Book Building and is favorably inclined. However he is also concerned about the retail investors. He does an analysis of the merits and demerits of Plain Vanilla IPO and Book Building methods. Which of the following statement is true?
    • A. 

      In book building demand for the IPO is known at the end of the issue

    • B. 

      In book building demand for the IPO is known at the beginning of the issue

    • C. 

      In book building demand for the IPO is known throughout the issue

    • D. 

      In book building demand for the IPO Is not known

  • 19. 
    Which statement is true
    • A. 

      In a Vanilla IPO , price discovery is better than in a book building issue

    • B. 

      In a Vanilla IPO, price discovery is less efficient than in a book building issue

    • C. 

      In a Vanilla IPO ,price discovery is throughout the issue

    • D. 

      In Book building, price discovery is non-existent

  • 20. 
    Abhishek Joshi’s parents are Senior Citizens. They have no other source of income other than what they get from Abhishek per month. Abhishek wants to ensure a separate source of cash inflow for them thereby ending their dependency upon him. For this purpose he wants to deposit Rs 5 Lacs each in the name of his parents in the Senior Citizen Savings scheme 2004. Is the same allowed?
    • A. 

      No, any deposit in the said scheme has to be made from the retirement benefits of the concerned depositor

    • B. 

      No, any deposit in the said scheme has to be sourced from Self Funds only

    • C. 

      Yes, after 60 years of the age of the depositor, the source of deposit is immaterial

    • D. 

      Yes, any person not having any source of income can make a deposit in the said scheme

  • 21. 
    In case of fixed income securities, which of the following statements is not true?
    • A. 

      Current yield includes only the coupon if the security is sold immediately

    • B. 

      Current yield includes both coupon & capital gain/loss if the security is sold immediately

    • C. 

      YTM is the return an investor would receive if the security were held to maturity

    • D. 

      All are true

  • 22. 
    What ails the Indian Housing Society?
    • A. 

      Lack of clear titles in most cases

    • B. 

      High stamp duty rates

    • C. 

      Obsolete tenancy & rental control laws

    • D. 

      All of the above

  • 23. 
    A basis point is which one of the following?
    • A. 

      One Rupee, Re.1

    • B. 

      One percentage point, 1percent

    • C. 

      One paisa, Re.0.01

    • D. 

      One one-hundredth of one percentage point, 0.01 of 1percent

  • 24. 
    Government Bond is best described by which one of the following statements?
    • A. 

      It has no voting privileges

    • B. 

      It receives no cash dividends

    • C. 

      It may be resold at any time

    • D. 

      All of the above

  • 25. 
    Which of the following statements best describe corporate bonds?
    • A. 

      Bond investors are creditors of the corporation

    • B. 

      The majority of bonds make coupon interest payment once per annum.

    • C. 

      Both (a) and (b) are true

    • D. 

      None of the above are true

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