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Advanced Wealth Management Course (IIBF) - Paper 1

Part I:Ch 8:Recommending FP Strategies

Q1.

An investor in need of regular income should not select:

Public provident fund

A bank deposit

A debt fund

An equity growth fund

Q2.

The strategy advisable for an investor to maximize investment return in the long run is:

Concentrate investments in one sector

Switch from poor performers to good performers

Liquidate poorly performing investments from time to time

Buy and hold on to investment for a long time

Q3.

A ‘buy and hold’ strategy works well in a good mutual fund if the client is willing to wait out a full market cycle.

True

False

Q4.

A criticism of rupee cost averaging is:

Over a period of time, average per share price will be more than guessing the highs and lows.

Rupee cost averaging has no serious shortcoming

Investment is for the same amount at regular intervals

It does not tell you when to buy, sell or switch from one scheme to another.

Q5.

Direct investment in stock markets can be a better option over investing through mutual funds if:

The investor has large capital, knowledge and resources for research

The investor wants to invest for the long term

The investor wants better returns than those offered by mutual funds

The investor has identified a bullish phase in the stock market

Q6.

If you maintain a flexible ratio of asset allocation, would you

Rebalance the Debt/Equity allocation frequently?

Keep fixed percentages of equity and debt investments at all times?

Generally avoid portfolio rebalancing?

Rebalance the Debt/Equity allocation periodically?

Q7.

A fixed ratio of asset allocation means that balance is maintained by liquidating a part of the position in the asset class with lower return and reinvesting in the other asset with higher return.

True

False

Q8.

(I) Asset allocation means determining the percentage of your investments to be held in various asset classes. (II) A flexible ratio of asset allocation means doing any re-balancing and letting the profits run.

Both the statements are correct

Only statement (I) is correct

Only statement (II) is correct

Both the statements are wrong

Q9.

According to Bogle suggestion, A Basic Indexed Portfolio will be:

60% in Total Stock Market & 40% in Total Bond Market Portfolio

85% in Total Stock Market & 15% in Total Bond Market Portfolio

50% in Total Stock Market & 50% in Total Bond Market Portfolio

70% in Total Stock Market & 30% in Total Bond Market Portfolio

Q10.

According to Bogle, the strategic allocation for Younger Investors in Distribution Phase (equity/debt) is:

50/50

80/20

70/30

60/40

Q11.

According to Bogle, the strategic allocation for Older Investors in Accumulation Phase is:

70/30

60/40

50/50

80/20

Q12.

The liquidity of Mutual funds option is __________

Low

High

Moderate

High/Low

Q13.

(I) The volatility of FI Bonds option is high. (II) The convenience of Corporate Debentures option is low.

Both the statements are correct

Only statement (I) is correct

Only statement (II) is correct

Both the statements are wrong

Q14.

Mutual funds focus their investment activities based on:

Income

Growth

Both A & B

Liquidity

Q15.

There is contractual guarantee for repayment of principal or interest to the investor in Mutual fund.

True

False

Q16.

According to Bogle suggestion, A Basic Managed Portfolio will be:

50% in diversified equity ‘value’ Funds, 25% in a Govt Securities, 25% in High Grade Corporate bond Funds

60% in diversified equity ‘value’ Funds, 20% in a Govt Securities, 20% in High Grade Corporate bond Funds

50% in diversified equity ‘value’ Funds, 50% in a Govt Securities.

50% in a Govt Securities, 50% in High Grade Corporate bond Funds

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