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1. Which of the following is not a feature of personal Financial Planning?

a) Risk profiling of client

b) Defining a basic asset allocation for the client
c) Monitoring achievement of goals periodically
d) Churning investment portfolio often to achieve best returns
2. Which of the following is not directly linked to achieving a financial goal?
a) Cash Flow management
b) Taking a risk cover
c) Investment Management
d) Retirement Planning
3. Which of the following best defines Financial Planning process?
a) Managing finances while managing risks as well in meeting an individuals financial goals
b) Managing investments dynamically to achieve best returns
c) Managing finances with least risk so that financial goals do not suffer due to investment and
market risks
d) Accumulating appropriate sums to achieve goals of life without resorting to borrowings
4. Following is the most important determinant for an investment plan to achieve the desired
a) Choosing the best investment product
b) Choosing the asset class giving best returns
c) Choosing an asset allocation appropriate to ones situation
d) Managing investment portfolio through tactical asset allocation
5. Calculate the Net worth of Ramesh with the financial details as: House worth Rs. 50 lac,
Housing loan outstanding Rs. 26 Lac, Mutual Fund investments Rs. 6 Lac, PPF Rs. 6.5 Lac, Cash
and bank deposits Rs. 1.8 Lac, personal loan Rs. 1.3 Lac, Gold & jewellery Rs. 3.2 Lac.
a) Rs. 37.00 Lac
b) Rs. 40.20 Lac
c) Rs. 35.20 Lac
d) Rs. 33.70 Lac
6. Which of the following is a financial goal?

a) Rs.6 lakhs required for sisters wedding

b) A sizable sum needed to buy a new car in two years time
c) Rs. 10 lakhs needed for purchasing a flat
d) Rs.5 lakhs needed after two years to pay childs tuition fees
7. Mr. Khanna requires Rs.10 lakhs in six months time to pay his sons admission fees. An
appropriate investment to set aside money for his goal would be

a) Equity shares of high-growth companies

b) Real estate

c) Short term debt fund

d) Long term corporate bond
8. Jaya needs Rs.5 lakhs urgently for an emergency medical procedure. Which investment is
she most likely to tap?

a) Shares of Hindalco Ltd

b) Bank deposit
c) Gold jewellery
d) 5-year bonds of a finance company
9. A conservative investor wants to accumulate Rs.20 lakhs in 3 years time. What would be an
appropriate investment option for him?

a) Shares of selected growth companies

b) Bank deposits and good quality bonds
c) Property
d) Gold funds

10. Ajay has invested only in PPF A/c. which matures in 2016. For his short term goals, what
kind of risk does he face?
a) Investment Risk
b) Liquidity Risk
c) Regulatory Risk
d) Default Risk
11. Anita is a conservative investor and puts her money only in Fixed Deposits which she rolls
over every year. In a falling interest rate scenario, which risk can be of most concern to her?
a) Re-investment Risk
b) Default Risk
c) Inflation Risk
d) Taxation Risk
12. Standard Deviation of a security in a given period measures________.
a) The deviation of returns from the security from their mean value in the period
b) The range between lowest and highest return given by the security in the period
c) The deviation of return on security from market return in the period
d) The extent of lower return on security than the market in the period
13. For a portfolio of two securities to achieve diversification, the
a) Correlation between the securities needs to be positive
b) Correlation between the securities needs to be zero
c) Correlation between the securities needs to be negative
d) Correlation coefficient between the securities needs to be 0.5

14. A retired person is depending on a monthly annuity income to finance his expenses. The
greatest risk faced by his cash flows is

a) Business risk
b) Exchange rate risk
c) Interest rate risk
d) Inflation risk
15. Investment in a government security issued at a fixed interest rate is subject to

a) Credit risk
b) Business risk
c) Interest rate risk
d) Liquidity risk
16. An investor purchases equity shares of a cement manufacturing company. The returns
from his investment do not face

a) Interest rate risk

b) Credit risk
c) Business risk
d) Inflation risk
17. An investor holds a large portfolio of shares from different companies and industries. Her
portfolio is likely to be protected from

a) Credit risk
b) Inflation risk
c) Liquidity risk
d) Unsystematic risk

18. By investing Rs. 1 Lac in a security today, the maturity proceeds after 10 years will be Rs.
2.80 Lac. What return is expected from the security over the period of investment?
a. 6.05% p.a.
b. 0.84% p.a.
c. 18% p.a.
d. 9.49% p.a.
19. Rajan wishes to obtain a return of 10% p.a. over a period of 8 years from a security. What
investment should he make in the security to get Rs. 2 Lac over this period?
a) Rs. 93,300
b) Rs. 1,00,600
c) Rs. 85,800
d) Rs. 1,03,100
20. A bank charges 8.5% p.a. interest on loan on a monthly reducing balance basis. What is
the yearly effective rate of interest?
a) 8.50% p.a.

b) 9.06% p.a.
c) 8.84% p.a.
d) 8.71% p.a.
21. A retired person needs inflation adjusted annuity in his post-retirement period. If inflation
is assumed at 4% p.a. and rate on annuity is 7.5% p.a., what should be the real rate of return?
a) 4.05% p.a.
b) 7.50% p.a.
c) 3.36% p.a.
d) 11.5% p.a.
22. Investment A appreciates in value by 20% after one year. Investment B appreciates by
40% after three years. Which gives a higher return?

a) Investment B, because it has a higher absolute return

b) Investment A, because it can be exited after just one year
c) Investment B, because it has a higher holding period
d) Investment A, because it has a higher annualized return
23. The concept of time value of money implies that

a) Money should be invested immediately without wasting time

b) Due to inflation, money has a lower purchasing value in future
c) The timing of investment influences final returns
d) Current cash inflows can be re-invested to earn a return that increases future value
24. An investor in mutual funds typically enters the fund at a certain value, and exits at
another value after a specified holding period. The appropriate measure to assess his return

a)Absolute return
b) Annualized return
c) Holding Period Return
d) IRR
25. An investment in 7% tax free bonds is compared with an investment in a 9% bank deposit
where interest is taxable. Both have a one year investment horizon. Which of the following is

a) The bond interest is tax free so it is better

b) For an investor who is not taxable, the bank deposit offers a better return
c) For an investor with a 30% tax rate, the bank deposit gives higher post tax return
d) For an investor with a 10% tax rate, the bank deposit gives lower post-tax return

26. Which of the following account cannot be opened under PPF scheme?
a) Account in the name of Mr. X who is a resident
b) Account on behalf of Mr. Y who is resident minor
c) Account in the name of Mr. and Mrs. X (both are resident)
d) Account in the name of Mr. Z who is resident

27. For how many years an account under senior citizen scheme can be extended?
a) 5 years
b) 3 years
c) 1 year
d) 6 years
28. The Price at which option is exercised is known as ___________.
a) Market Price
b) Book Price
c) Strike Price
d) All of the above
29. If a PPF account is opened in FY 2005-2006, the same will normally mature on .
a) 31st March, 2021
b) 1st April, 2020
c) 1st April, 2021
d) 31st March, 2020
30. What is the range of period for which Treasury Bills (T-Bills) are issued?
a) 91days to 364 days
b) 90 days to 180 days
c) 1 year to 3 years
d) 2 years to 25 years
31. Interest on a NSC

a) Is paid out annually

b) Is compounded and paid out quarterly
c) Is accumulated and paid at the end of the term
32. Which of the following instruments under Section 80C enjoys an EEE status?

a) ELSS( Equit Linked Sving Scheme)

b) PPF (Public Provident Fund)
c) SCSS (Senior citizine saving scheme)
33. FMPs(Fixed Maturity Plans) achieve lower mark-to-market risk by investing in

a) shorter term securities that mature before the tenor of the fund
b) floating rate securities with reset tenor less than six months
c) securities whose maturity matches that of the fund

34. Short term debt funds carry

a) High mark to market risk

b) Low mark-to-market risk
c) No mark-to-market risk

35. Risk free rate implies a return equal to ________.

a) G-Sec Yield
b) Equity Market Return Yield
c) Corporate Bond Yield
d) Bond Yield
36. Under which investment strategy undervalued stocks are purchased and overvalued is
a) Passive Strategy
b) Active Strategy
c) Management Strategy
d) Business Strategy
37 . Process of distributing investors wealth among various asset classes is
known as _________.
a) Financial Planning
b) Financial Advising
c) Asset Allocation
d) Investment Strategy
38 . How can a risky asset be defined?
a) An asset which has high degree of uncertainty of return
b) An asset which has low degree of uncertainty of return
c) An asset which has no uncertainty of return
d) An asset which has any degree of uncertainty of return
39. Which of these asset classes is most likely to meet the objective of generating regular

a) Equity
b) Cash and equivalents
c) Debt
40. Which of these asset classes is primarily used to meet regular needs for liquid cash?

a) Debt
b) Cash and equivalents
c) Equity
41. The long term goal of an investor is to build a corpus that is adequate to serve his income
needs after retirement. The portfolio when constructed, should have a higher allocation to

a) Debt

b) Cash equivalents
c) Equity
42. An investor who seeks a high level of return and is willing to bear the risks of such
investments is likely to be recommended

a) Aggressive portfolio
b) Conservative portfolio
c) Moderate portfolio

43. Providing protection is a __________function of insurance:

a) secondary
b) other
c) primary
d) is not a
44. What is human life value?
a) Present value of persons future earnings
b) Present value of persons estimated expenses
c) Present Value of persons future savings
d) Present value of persons future expenses
45. Which contract provides a series of periodic payment?
a) Annuity
c) Endowment Insurance
d) Term Life Policy
46. Which of the following products is a pure insurance product?

b) Money back policy
c) Term insurance policy
d) Whole life policy
47. In which of the following situations will the insured not have insurance cover?

a) Surrendered policy
b) Paid-up policy
c) Term policy
d) Both (a) and (b)
48. The premium payable on a ULIP is higher for the same sum assured as a term policy

a) The period of cover is shorter

b) A portion of the premium is used for investment

c) The pool of insured is smaller

d) The risk is higher
49. The term of insurance in non-life insurance is typically

a) Decided by the insured

b) Decided based on sum insured
c) One year
d) Flexible

50. Which of the following is defined benefit plan?

a) Gratuity
b) Provident Fund
c) Pension
d) Annuities
51. Who can open an account with public provident fund?
a) Individual
b) Company
c) HUF
d) All of the above
52. Equity component of the New Pension Scheme investment portfolio replicates a/an
a) Exchange Traded Fund
b) Hybrid Mutual Fund
c) Equity Mutual Fund
d) Index
53. What is the age limit for reverse mortgage scheme in India?
a) 65
b) 60
c) 55
d) 58
54. What maximum amount can be invested per year under New Pension Scheme?
a) No limit on maximum contribution per year
b) 6,000
c) 70,000
d) 1,00,000

55. Growth-oriented investments are suitable for which stage of retirement savings?

a) Accumulation stage

b) Distribution stage
c) Income stage
d) Investment stage
56. Inflation does which of the following to retirement planning?

a) Reduces the periodic savings required

b) Reduces the return generated by an investment
c) Increases the retirement corpus required
d) Increases the value of the corpus created
57. The retirement corpus may require review

a) Every year
b) Every time there is a significant change in financial situation
c) Closer to the distribution period
d) Not at all
58. Which of the following is a solution to manage inadequacy of retirement corpus closer to

a) Invest in riskier assets

b) Postpone retirement
c) Reduce periodic savings
d) Increase corpus target
59. Commission received from business forms part of income from ___________.

a) Business and profession

b) Capital Gains
c) Salary
d) Other sources
60. The Rajiv Gandhi Equity Savings Scheme, 2012 allows exemption up to _______ for
investments made in eligible securities up to Rs. 50,000.

a) 100%
b) 50%
c) 40%
d) 60%
61. For a person to be qualified as a NRI, he must have stayed outside India for a minimum
period of _____ days in a previous financial year.

a) 365
b) 280
c) 182
d) 150

62. Registration and regulation of securities market intermediaries is the function of _____.

d) SRO
63. A person who has a complaint against an insurance company must lodge his complaint
d) RBI