Simulated Test 01 Question 1 Marks: 1 An annuitant under an Annuity Policy of Insurance company is the following person: Choose one answer. a. A person who receives annuity b. A nominee. c. An assignee. d. None of the above. Incorrect Marks for this submission: 0/1. Question 2 Marks: 1 What options does an employer have for superannuation arrangement? Option (A) - Payment by employer Option (B) - Funding through a trust. Choose one answer. a. Only (A) b. Only (B) c. Neither (A) nor (B) d. Both (A) & (B) Incorrect Marks for this submission: 0/1. Question 3 Marks: 1 An eligibility criterion for withdrawal from a Provident fund for purchase of a house is ___________. Choose one answer. a. membership of the fund for 5 years, minimum balance in members a/c Rs. 1,000, purchase should be in favour of the member or member and spouse. b. membership of the fund for 10 years, minimum balance in members a/c Rs. 1,000, purchase should be in favour of the member or member and spouse. c. membership of the fund for 5 years, minimum balance in members a/c Rs. 5,000, purchase should be in favour of the member or member and spouse. d. membership of the fund for 5 years, minimum balance in members a/c Rs. 1,000, purchase should be in favour of the member or spouse. Incorrect Marks for this submission: 0/1.
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Simulated Test 01
Question 1
Marks: 1 An annuitant under an Annuity Policy of Insurance company is the following person: Choose one answer.
a. A person who receives annuity
b. A nominee.
c. An assignee.
d. None of the above.
Incorrect
Marks for this submission: 0/1.
Question 2
Marks: 1 What options does an employer have for superannuation arrangement?
Option (A) - Payment by employer
Option (B) - Funding through a trust. Choose one answer.
a. Only (A)
b. Only (B)
c. Neither (A) nor (B)
d. Both (A) & (B)
Incorrect
Marks for this submission: 0/1.
Question 3
Marks: 1 An eligibility criterion for withdrawal from a Provident fund for purchase of a house is
___________. Choose one answer.
a. membership of the fund for 5 years, minimum balance in members a/c Rs. 1,000,
purchase should be in favour of the member or member and spouse.
b. membership of the fund for 10 years, minimum balance in members a/c Rs. 1,000,
purchase should be in favour of the member or member and spouse.
c. membership of the fund for 5 years, minimum balance in members a/c Rs. 5,000,
purchase should be in favour of the member or member and spouse.
d. membership of the fund for 5 years, minimum balance in members a/c Rs. 1,000,
purchase should be in favour of the member or spouse.
Incorrect
Marks for this submission: 0/1.
Question 4
Marks: 1 An establishment with 100 employees, notified by Central Government and also that which
is a factory engaged in a specified industry, would be covered under Employees Provident
fund and Miscellaneous provision Act, 1952 if the number of employees, getting salary of
Rs.6500 or less, is/are _____________. Choose one answer.
a. 20 or more
b. It will be covered even if the income of all employees is above Rs. 6500
c. 1 or more
d. More than 20
Incorrect
Marks for this submission: 0/1.
Question 5
Marks: 1
Which of the following is a defined contribution plan?
Choose one answer.
a. Leave salary
b. Gratuity
c. Unrecognized Provident Fund
d. Voluntary Retirement Scheme
Incorrect
Marks for this submission: 0/1.
Question 6
Marks: 1 As an employee Mohan has come to you with his question on superannuation plans/ Annuity
Plans to get more educated with current scenario. The term 'Employee benefits' includes
contributions in which of the following categories of schemes? Choose one answer.
a. Non occupation disability Insurance
b. Unemployment compensation Insurance
c. Social security Scheme
d. Group Insurance Scheme
Incorrect
Marks for this submission: 0/1.
Question 7
Marks: 1 Deferred Annuity means ___________ Choose one answer.
a. purchase price could be paid in a single installment
b. annuity payments begin at the end of a selected term
c. purchase price could be paid in regular installments spread through the period of
deferment
d. All of the above.
Incorrect
Marks for this submission: 0/1.
Question 8
Marks: 1 Under EPF scheme, monthly pension after retirement is decided on _________. Choose one answer.
a. eligible service and pensionable salary
b. pensionable service and pensionable salary
c. actual service and pensionable salary
d. None of the above.
Incorrect
Marks for this submission: 0/1.
Question 9
Marks: 1 The maximum advance a member can take from his/her Provident Fund, for major illness
involving stay in hospital for at least 1 month, is ______. Choose one answer.
a. 12 months wage (basic + DA)
b. 24 months wage (basic + DA)
c. 6 months wage (basic + DA)
d. 36 months wage (basic + DA)
Incorrect
Marks for this submission: 0/1.
Question 10
Marks: 1
Which of the following statement/s is/are correct?
(A) Any salary surrendered by the employee to the central Government under the voluntary
Surrender of Salaries Act, 1961, will not be included while calculating his taxable income if
he is a Government employee.
(B) Any salary surrendered by the employee to the central Government under the
voluntary Surrender of Salaries Act, 1961, will not be included while calculating his taxable income if he is a private/public sector employee.
Choose one answer.
a. only (B) is correct
b. only (A)is correct.
c. Both (A) and (B) are wrong.
d. Both (A) and (B) are correct.
Incorrect
Marks for this submission: 0/1.
Question 11
Marks: 1 U/s 10 of the Income Tax Act, Gratuity paid to a Government Employee or employees of
local authorities is exempt upto a limit of ______________. Choose one answer.
a. Rs. 350000
b. Rs. 300000
c. Rs. 250000
d. None of the above
Incorrect
Marks for this submission: 0/1.
Question 12
Marks: 1 Deduction in respect of contributions to an annuity plan of certain pension funds under
Section 80C of IT Act is allowed to ___________ Choose one answer.
a. Any Assessee
b. Individual Assessee only
c. Individual or HUF
d. Individual, resident in India
Incorrect
Marks for this submission: 0/1.
Question 13
Marks: 1 The process of retirement planning would generally not involve ________. Choose one answer.
a. concentrating on maximizing returns on Present / Past Investments
b. projecting individual needs and goals into the future and making sound financial plan
c. making a plan for management & disposition of assets at death
d. planning for staying physically healthy & making necessary psychological adjustment
and to plan for housing and leisure / work
Incorrect
Marks for this submission: 0/1.
Question 14
Marks: 1 The matching contribution by the Government, to the Contributory Provident Fund, for its
employees, is ____________. Choose one answer.
a. 8.33%
b. 12%
c. 10%
d. None of the above
Incorrect
Marks for this submission: 0/1.
Question 15
Marks: 1
Which of the following statement/s is /are correct?
(i) A fixed benefit annuity is an annuity under which the insurer guaranties that at least a
defined amount of annuity benefit will be provided for each rupee applied to purchasing the
annuity.
(ii) A fixed benefit annuity is an annuity under which the insurer guaranties that a fixed amount of annuity benefit will be provided for life.
Choose one answer.
a. Only (i) is correct.
b. Only (ii) is correct.
c. Both (i) & (ii) are correct
d. Both (i) & (i) are wrong.
Incorrect
Marks for this submission: 0/1.
Question 16
Marks: 1 Interest rate on Post Office Savings Bank is payable__________. Choose one answer.
a. monthly
b. quarterly
c. half yearly
d. Yearly
Incorrect
Marks for this submission: 0/1.
Question 17
Marks: 1 Reciprocal of P/E ratio, E/P ratio measures___________.
Choose one answer.
a. market price of a share
b. growth ratio
c. cost of debt
d. opportunity cost of capital
Incorrect
Marks for this submission: 0/1.
Question 18
Marks: 1 Mr. Prasad is a small-scale trader. He has a welfare scheme for his few employees, for
whom he runs a small provident fund, which is yet to be recognized. He also contributes to
this fund as an employer and matches the employee’s contribution. He has encouraged his
employees also to open PPF accounts to save tax and set aside funds for the future. Mr.
Prasad has called you to take a look at what he has been doing and advise him on the
choice of products for providing retirement benefits to himself and his employees. Can Mr.
Prasad open joint PPF accounts with his employees? Choose one answer.
a. A PPF account cannot be opened in joint names.
b. No, joint accounts can be held only by members of the same family or HUFs.
c. Yes, it can be opened, but the proceeds cannot be made payable to either or survivor.
d. Yes, provided the employee is the first holder.
Incorrect
Marks for this submission: 0/1.
Question 19
Marks: 1 A Provident Fund acquires its status of recognition by ___________. Choose one answer.
a. Labour Ministry
b. SEBI
c. PF Commissioner
d. IT Authority
Incorrect
Marks for this submission: 0/1.
Question 20
Marks: 1
Which of the following statement is correct? Choose one answer.
a. Payment under a deferred Annuity Plan starts after a specified term.
b. Payment under a deferred Annuity Plan starts on retirement.
c. Payment under a deferred Annuity Plan starts from the age of 55 years.
d. Payment under a deferred Annuity Plan starts immediately on payment of premium.
Incorrect
Marks for this submission: 0/1.
Question 21
Marks: 1 If the inflation rate is 4.9% and tax rate is 30% the required rate of return to maintain the
value of an investment will be ___________. Choose one answer.
a. 8%
b. 9%
c. 7%
d. 10%
Incorrect
Marks for this submission: 0/1.
Question 22
Marks: 1 An auditor of an Exempted Provident Fund can be: Choose one answer.
a. A member of FPSB India
b. A practicing Chartered Accountant
c. An employee of the Employee Provident Fund Organization
d. The auditor of the company, which is having the exempted provident fund
Incorrect
Marks for this submission: 0/1.
Question 23
Marks: 1 Business Risk is associated with Choose one answer.
a. Economy as a whole
b. International Market
c. Nature of Enterprise
d. None of the above
Incorrect
Marks for this submission: 0/1.
Question 24
Marks: 1 Diversified Portfolio affects Systematic Risk in the following way: Choose one answer.
a. No Impact.
b. Huge Impact.
c. Little Impact.
d. None of the above
Incorrect
Marks for this submission: 0/1.
Question 25
Marks: 1 Calculate the GDP of India with the given figures:
Consumption: $ 300 billion
Investments: $ 400 billion
Government spending: $ 300 billion
Exports: $ 150 billion
Imports: $ 200 billion Choose one answer.
a. $1,000 billion
b. $650
c. $1,050
d. $950
Incorrect
Marks for this submission: 0/1.
Question 26
Marks: 1 Amit is eligible for gratuity as per the provisions of the Payment of Gratuity Act, 1972.
Amit’s employer has agreed to pay him a gratuity amount that is higher than what is
stipulated under the Act. Amit accordingly would receive a final settlement of Rs. 5,00,000/-
on retirement. What is the tax status of this amount? Choose one answer.
a. The gratuity paid is exempt from Income Tax only to the extent of Rs.3,50,000/-.
b. The amount of gratuity payable to him cannot exceed Rs. 3,50,000/-.
c. There is no specific tax exemption for gratuity, in the Income Tax Act.
d. The Income Tax Act will only allow a maximum exemption upto 15 days wages per
completed year of service. The rest is taxable.
Incorrect
Marks for this submission: 0/1.
Question 27
Marks: 1
The investment limit in PO MIS, which can save tax under section 80C of the Income Tax
Act, 1961 to a resident individual is:
Choose one answer.
a. Min Rs. 6000/- and no upper limit
b. Min Rs. 6000/- Max 6 lakh per assessee
c. Min Rs. 6000/- Max 3 lakh per assessee
d. None of the above
Incorrect
Marks for this submission: 0/1.
Question 28
Marks: 1
For defined benefit plans, which of the following changes in actuarial assumption would
increase plan costs to an employee?
1. Early retirement without a reduction in benefits.
2. Longer life expectancy predicted
3. An increase in inflation expectations regarding labor costs.
Choose one answer.
a. 1 & 2 only
b. 1 only
c. 1, 2 & 3
d. 2 & 3 only
Incorrect
Marks for this submission: 0/1.
Question 29
Marks: 1 Sundar has been an employee of a public sector undertaking for the past 25 years and is
retiring the next year. He is eligible for gratuity as per the provisions of the Payment of
Gratuity Act, 1972. He hopes to invest the proceeds along with the PF proceeds, in order to
fund his retirement. Sundar does not receive his gratuity 45 days after his retirement. What
are his rights? Choose one answer.
a. Sundar should receive his gratuity within 30 days after his retirement. The employer has
to pay penal interest for delay in the payment of gratuity.
b. Sundar should receive his gratuity within 60 days after his retirement. He should wait for
his settlement.
c. Sundar should receive his gratuity within 21 days after his retirement. The employer has
to pay penal interest at 15% for delay in the payment of gratuity.
d. There is no legally determined time frame for payment of gratuity. Sundar has legal
remedies if payment is not made "within reasonable time."
Incorrect
Marks for this submission: 0/1.
Question 30
Marks: 1 Investment in Senior Citizens Pension Plan qualifies for deduction u/s 80C of IT Act. Choose one answer.
a. True
b. False
c. Only upto Rs. 70,000
d. Data insufficient
Incorrect
Marks for this submission: 0/1.
Question 31
Marks: 1 Which one of the following statements is NOT true for a defined-benefit plan.
(i) It favors older participants.
(ii) Contributions are annual & arbitrary.
(iii) It requires an actuary. Choose one answer.
a. (i) only
b. (ii) only
c. (iii) only
d. None of the statements
Incorrect
Marks for this submission: 0/1.
Question 32
Marks: 1 No relief under section 89 of the Income Tax Act 1961 is admissible if taxable Gratuity is in
respect of services rendered for less than ________ years. Choose one answer.
a. 15
b. 5
c. 9
d. None of the above.
Incorrect
Marks for this submission: 0/1.
Question 33
Marks: 1 Which amongst the following is true about the interest received from Recognized Provident
Fund (RPF)? Choose one answer.
a. Not treated as income in the year of credit.
b. Not treated as income if the rate is equal to/less than 9.5%. Rate over and above this is
taxable
c. Fully exempt from tax.
d. None of the above
Incorrect
Marks for this submission: 0/1.
Question 34
Marks: 1 A person wants to earn Rs. 5000 a month when the interest rate is 6%. What is the capital
required? Choose one answer.
a. Rs. 1000000
b. Rs. 10000
c. Rs. 500000
d. Rs. 50000
Incorrect
Marks for this submission: 0/1.
Question 35
Marks: 1 A person invests Rs. 70000 on the 1st of April for 5 year. The amount accumulated at 8% is
_______ Choose one answer.
a. Rs. 443515
b. Rs. 434515
c. Rs. 443155
d. Rs. 434155
Incorrect
Marks for this submission: 0/1.
Question 36
Marks: 1 Changing the weights of assets in the portfolio at regular intervals is called _____. Choose one answer.
a. Diversifying
b. Rebalancing
c. Concentrating
d. None of the above
Incorrect
Marks for this submission: 0/1.
Question 37
Marks: 1 One of the biggest reasons to undertake portfolio evaluation is _________. Choose one answer.
a. poor planning
b. no analysis
c. changing needs of the individual
d. young age of the person for whom the plan ismade
Incorrect
Marks for this submission: 0/1.
Question 38
Marks: 1 If there is a requirement of capital protection then _________ instrument will not be used. Choose one answer.
a. Cash equivalents
b. Government securities
c. Mid cap shares
d. Bonds
Incorrect
Marks for this submission: 0/1.
Question 39
Marks: 1
The number of members covered in a group _______.
Choose one answer.
a. Are fixed
b. Remain the same
c. Fluctuate
d. None of the above
Incorrect
Marks for this submission: 0/1.
Question 40
Marks: 1
If you want to tweak the cover on a policy and customize then this will not be possible in
________ Choose one answer.
a. Group Insurance
b. Individual insurance
c. Term Insurance
d. Unit linked policy
Incorrect
Marks for this submission: 0/1.
Question 41
Marks: 2
per month and Dearness Allowance is 40% of Basic Salary for retirement benefits. He
retired from his job on January 1, 2009 and shifted to his village. He is entitled to the following benefits at the time of retirement.
Gratuity = Rs.98000.
Pension from January 1, 2009 = Rs. 2000 per month.
Payment from recognized PF = Rs. 300000. Encashment of earned leave for 150 days = Rs. 36000.
He was entitled to 40 days leave for every completed year of service. He got 50% of his
pension commuted in lump sum w.e.f. March 1, 2009 and received Rs. 120000 as
commuted pension.
Gaurav contributes Rs. 900 per month to RPF to which his employer contributes an equal
amount. With these details you are required to help him with the following questions related
to previous year 2008-09. What amount will he get as the tax exemption under the
Payment of Gratuity Act, 1972?
Choose one answer.
a. Rs. 63,000/-
b. Rs. 67,846/-
c. Rs. 35,000/-
d. Rs. 3,50,000/-
Incorrect
Marks for this submission: 0/2.
Question 42
Marks: 2
Vishal is working with Amex Ltd since October 1, 1995. He is entitled to a basic salary of Rs.
6,000 per month. Dearness Allowance is 40% of Basic Salary for retirement benefits. He
retired from his job on January 1, 2009. He is entitled to the following benefits at the time
of retirement.
Gratuity = Rs. 98,000.
Pension from January 1, 2009 = Rs. 2,000 per month.
Payment from recognized PF = Rs. 3,00,000. Encashment of earned leave for 150 days = Rs. 36,000.
He was entitled to 40 days leave for every completed year of service. He got 50% of his
pension commuted in lump sum w.e.f April 1, 2009 and received Rs. 1,20,000 as commuted
pension. Vishal contributes Rs. 900 per month to RPF to which his employer contributes an
equal amount. What will be the amount of un-commuted pension for Vishal that will form part of his total income for the A.Y. 2009-10?
Choose one answer.
a. NIL
b. Rs. 4,000
c. Rs. 6,000
d. Rs. 1,000
Incorrect
Marks for this submission: 0/2.
Question 43
Marks: 2 Ashok receives leave encashment of Rs. 2,00,000 on account of accumulated leave of 240
days. He has completed 24 years of service and his last 10 months average monthly salary
is Rs. 10,000. What is the taxable portion of leave encashment for Ashok if he was entitled
to 40 days leave for every year of service? Choose one answer.
a. Rs. 1,00,000
b. Rs. 2,00,000
c. Nil
d. Rs. 2,50,000
Incorrect
Marks for this submission: 0/2.
Question 44
Marks: 2 Consider a portfolio of two investments viz. A & B. The sum total of volatility of A and B
respectively, represented by standard deviation of the two investments, will be equal to the
volatility of the portfolio as a whole if _________________. Choose one answer.
a. A and B have a correlation of Zero
b. A and B have a correlation of 1
c. The portfolio is equally divided between A and B
d. The return on the portfolio is equal to the sum of returns of A and B.
Incorrect
Marks for this submission: 0/2.
Question 45
Marks: 2 Amit works as a seasonal employee in an establishment covered under Gratuity Act. His
date of joining is 01 Apr 1978, and works till 31 Mar 2008. His wages (Basic + DA) at the
time of retirement is Rs. 10000 per month. Work out his gratuity entitlement. Choose one answer.
a. Rs. 115385
b. Rs. 80769
c. Rs. 173077
d. Rs. 350000
Incorrect
Marks for this submission: 0/2.
Question 46
Marks: 2 An insurance firm has to create and sell a policy to cover the risk of partial disability to
workmen in a chemical factory. Which of the following is not a relevant factor in pricing the
policy? Choose one answer.
a. The ability of the insurance firm to deploy the premium and earn positive investment
returns on the funds.
b. The ability of the workmen to bear the cost of the policy.
c. The extent of probable disability created due to the work environment and its impact on
workmen.s earning capability.
d. The willingness of the management of the firm to bear part of the costs of the premium.
Incorrect
Marks for this submission: 0/2.
Question 47
Marks: 2
Raj joins ABC Ltd. on 25th April 1968. ABC has 30 employees. If he is expected to retire on
15th November 2008, and his last drawn salary for gratuity purposes is Rs. 26,000 per month,
what amount of gratuity would be exempted from tax on account of Raj’s gratuity entitlement if
ABC Ltd is covered under the payment of Gratuity Act, 1972?
Choose one answer.
a. Rs. 6,00,000.
b. Rs. 5,20,000.
c. Rs. 3,50,000.
d. Rs. 3,12,000
Incorrect
Marks for this submission: 0/2.
Question 48
Marks: 2 Kulkarni is running an unrecognised Provident Fund, because he has a smaller number of
employees in his firm. Which of the following is true about the tax status of such a fund? Choose one answer.
a. Only the employees. contribution is eligible for a rebate under Section 80C.
b. Kulkarni.s contribution as the employer is exempt from tax in his books.
c. The interest received on such unrecognised PFs is taxable every year.
d. Accumulated employee’s contribution is taxable at the time of retirement
Incorrect
Marks for this submission: 0/2.
Question 49
Marks: 2 The savings of a person is Rs. 8000 per month. What should the figure turn out to be each
year person has to accumulate Rs 25 lakh in 15 years at an earnings rate of 7%? Choose one answer.
a. Rs. 98486
b. Rs. 99486
c. Rs. 97486
d. Rs. 96486
Incorrect
Marks for this submission: 0/2.
Question 50
Marks: 2 Mr. Roy has been an employee of a public sector undertaking for the past 25 years and is
retiring the next year. He is eligible for gratuity as per the provisions of the Payment of
Gratuity Act, 1972. He hopes to invest the proceeds along with the PF proceeds, in order to
fund his retirement. Prior to his wedding,Mr. Roy had nominated his mother to receive his
gratuity. Is his wife eligible to receive the gratuity proceeds in the event of his death? Choose one answer.
a. All nominations made prior to the employee acquiring a family are invalid once an
employee has acquired a family.
b. As long as a valid nomination is in place, the payment of gratuity will be made only to
such nominees.
c. The payment of gratuity will always be according to the registered will, irrespective of
the nominations.
d. The information is not sufficient for giving an answer.
Incorrect
Marks for this submission: 0/2.
Question 51
Marks: 2 Mr. Rajan’s investment portfolio comprises Rs.2 lakh in equity, Rs.5 lakh in debt and Rs. 1
lakh in his bank current account. Over one year the returns on equity and debt are 5% and
12%. At the end of the year to maintain his current asset allocation, he needs to
_____________ Choose one answer.
a. Do nothing
b. He needs to move Rs, 10000/- from equity and Rs. 60000/- from debt to cash.
c. He needs move Rs.7500/- to equity from debt and Rs. 8750/-to cash from debt
d. He needs to invest Rs. 70000/- in debt and equity.
Incorrect
Marks for this submission: 0/2.
Question 52
Marks: 2
Which of the following financial transactions / events would affect net worth of your client?
(A) Repayment of a loan using fund from a savings account.
(B) Purchase of car which is 75% financed with 25% down payment.
(C) The Nifty is appreciating, and the client is holding Nifty Indexed Mutual Fund. (D) Interest rate increases and the client holds substantial bond portfolio.
Choose one answer.
a. (C) & (D)
b. (B) & (C)
c. (A), (C) & (D)
d. All of the above
Incorrect
Marks for this submission: 0/2.
Question 53
Marks: 2 A 10 year 8.0% bond (Face Value- Rs.1000, interest payable semi-annually) maturing 6
years from today is available at a yield to maturity of 6.0%. It is likely to be priced at
_______________. Choose one answer.
a. Rs. 1100
b. Rs. 1149
c. Rs. 1168
d. Rs. 1498
Incorrect
Marks for this submission: 0/2.
Question 54
Marks: 2 Raykar is an accomplished Financial Planner and is also an expert on derivatives and high
yielding bonds. He understands client requirements well and is able to come up with
appropriate portfolio restructuring ideas for clients. He believes in quickly moving clients
from one investment to another through a dynamic process of research and
recommendations. What according to the Rules relating to the Code of Ethics is the most
applicable in this case? Choose one answer.
a. He does not violate the Rules if he explains to the client the reasons and is able to show
that the moves are appropriate to the client.
b. He does not violate the Rules since he conducts and has access to research and advises
on products relevant to clients based on an understanding of their requirements.
c. He does not violate the Rules since he is an acknowledged expert and knows what is best
for his clients.
d. He violates the Rules as it amounts to active churning of client portfolios.
Incorrect
Marks for this submission: 0/2.
Question 55
Marks: 2 Mrs. & Mr. Arora are aged 55 and 58 years respectively. Both expect to work till they turn
65. Their only goal is to fund their retirement. Which of the following is likely to be an
appropriate asset allocation strategy for them? Choose one answer.
a. 10% sectoral equity, 20% diversified equity, 30% long-term debt, and 40% medium term
debt
b. 20% Sectoral equity, 60% diversified equity, 20% long-term debt