1) Mahesh is employed in a company on a basic salary of Rs.

20,000 pm and is allowed a dearness allowance of 30% of which 50% is included in salary for retirement benefits. His company pays him HRA of Rs. 5,000 pm. Compute his exemption on HRA for FY 2007-08. Mahesh is staying in Meerut and pays a house rent of Rs. 5,000 pm. - Marks : 4

Rs. 35,160.

Rs. 24,840. Correct Answer

Rs. 32,400.

Rs. 60,000. 2) Sanjay, a resident of Nagpur, receives Rs. 78,000 as basic salary during FY 2007-08. He stays with his parents up to August 31, 2007 (for which he does not pay any rent) and thereafter in an accommodation taken on monthly rent of Rs. 3,000. His employer pays Rs. 700 per month as house rent allowance throughout the previous year. Determine the taxable portion of House Rent Allowance for Sanjay.

- Marks : 4

Rs. 4,900.

Nil

Rs. 8,400. Correct Answer

Rs. 3,500.

3) Ajay has worked in two companies viz. A Co. and B Co. He retires from A Co. on Nov 30, 1989 (salary at the time of retirement Rs. 2,600) and receives Rs. 22,000 as gratuity out of which Rs. 20,000 were exempted. He also retires from B Co. on Dec 10, 2007 after 28 years and 8 months of service and receives Rs. 2.90 lakh as deathcum-retirement gratuity. His average basic salary drawn from B Co. for the preceding 10 months ending on Nov 30, 2007 is Rs. 18,200 per month. Further he receives Rs.1000 per month as DA , 80% of which forms a part of his retirement benefits and 6% commisson on turnover achieved by him . total turnover achieved by him during 10 months ending Nov.30 2007is Rs. 2,00,000. What is the gratuity exempted from tax for Ajay for AY 2008-09? Assume neither of the companies A and B are covered under payment of Gratuity Act 1972. Marks : 4

Rs. 2,82,800

Correct Answer

Rs. 2,80,000

Rs. 3,30,000

Rs. 2,62,800 4) Nitish is a 30 year-old self employed youth and has been using the PPF account to accumulate Rs. 30,000 per year, for his future needs. The PPF account provides a compounded return of 8% p.a. He does not have a clear view yet on financial goals and needs but has been saving as a habit, for the last 5 years. Nitish is willing to look at a lifestyle after retirement that fits into a fixed Rs. 3,00,000 per annum spend, for an estimated 15 years. What is the spending opportunity for Nitish, at the time of his retirement at 60 years, given his saving and assuming a rate of 6% on his funds after retirement? (Assumption: All computations for interest, spend and savings

compound annually, assuming beginning of the period investment).

- Marks : 4

Rs. 20,81,345

Rs. 18,54,425

Rs. 14,26,890 Correct Answer

Rs. 24,94,570

5) Prashant is an employee in the private sector to whom Payment of Gratuity Act does not apply. He retires after eight years of service. Amongst other retirement benefits, he also receives a gratuity of Rs. 2,50,000. His average salary for the past ten months, before resigning, was Rs. 42,000 per month. He desires to know how much of the gratuity amount, if any, is taxable?

- Marks : 4

Rs. 82,000

Correct Answer

Nil

Rs. 2,50,000

Rs. 1,68,000 6) A client has the need to provide for the cost of his child's college education. He envisages that four annual payments of Rs. 20,000, in current money terms, would be needed beginning 15 years from now. Assuming level of inflation at 5% per annum and that the fund earns 8% per annum returns throughout, calculate the present value to be placed on this liability when carrying out a needs analysis for this client. (Round of your answer to the nearest '000')

- Marks : 4

Rs. 50000

Correct Answer

Rs. 49000

Rs. 24,000

Rs. 23,000 7) Ajay has a net worth of Rs. 2,00,000 at the beginning of the Financial Year 2006-2007. The following transactions occurred during the Financial Year 2006-2007 with respect to his account. 1. Paid off credit card liability worth Rs. 10,000 using savings account 2. Transferred Rs. 4,000 from savings account to PPF account 3. Purchased Rs. 2,000 of furniture with credit. What is the net worth of Ajay after these transactions?

- Marks : 4

Rs. 1,90,000.

Rs. 1,84,000.

Rs. 1,98,000. Correct Answer

Rs. 2,00,000

8) Vishal is working with Amex Ltd since October 1, 1994. He is entitled to a basic salary of Rs. 6,000 pm. Dearness Allowance is 40% of Basic Salary for retirement benefits. He retired from his job on January 1, 2008 (3 months before the end of F.Y 2008) and shifted to his village. He is entitled to the following benefits at the time of retirement. Gratuity = Rs. 98,000. Pension from January 1, 2008 = 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, 2008 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 uncommuted pension for Vishal that will form part of his total income for the A.Y. 2008-09?

- Marks : 4

NIL

Rs. 4,000. Correct Answer

Rs. 6,000.

Rs. 1,000. 9) " Member should act with care and skill in providing Financial Planning Services". This Forms part of ________ in the code of Ethics

- Marks : 2

Fairness Correct Answer

Diligence

Integrity

Competence 10) Abhishek is working for the Finance Ministry since October 1, 1994. He is entitled to a basic salary of Rs. 6,000 pm. Dearness Allowance is 40% of Basic Salary for retirement benefits. He retired from his job on January 1, 2008 (3 months before the end of F.Y 2007-08 ) and shifted to his village. He is entitled to the following benefits at the time of retirement. Gratuity = Rs. 98,000. Pension from January 1, 2008 = Rs. 2000 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 March 1, 2008 and received Rs. 1,20,000 as commuted pension. Abhishek contributes Rs. 900 per month to RPF to which his employer contributes an equal amount. What is the amount of commuted pension that will be exempt for Abhishek for the FY 2007-08?

- Marks : 4

NIL

Rs. 40,000

Rs. 80,000 Correct Answer

Rs. 1,20,000

11) Divya, a CFP certificant, recently took Ajay as a client. After receiving an excessive number of questions from Ajay regarding his plan, Divya became desperate and changed her business phone number to an unlisted number. She notified Ajay that he could not have her new phone number, and that he must communicate with her via email or fax. Which principle, if any, embodies Rules that require Divya to provide Ajay with her new number?

- Marks : 2

Integrity. Correct Answer

Fairness.

Objectivity.

Professionalism. 12) Mitesh has taken a loan from his employer, NTPC Ltd, for pursuing his higher studies. The amount that he pays to his employer for the loan for FY 2007--08 is Rs. 90,000. Out of this Rs. 90,000, Rs. 30,000 is towards repayment of the capital amount of the loan and the rest is towards repayment of interest. Deduction u/s 80E that is available to Mitesh would be _________.

- Marks : 2

Rs. 90,000

Rs. 60,000 Correct Answer

NIL

Rs. 30,000 13) (A) Interest income of the Employees' contribution in an Unrecognised Provident fund is Tax exempt. (B) The employee's contribution to an unrecognised Provident fund is tax exempt under Sec. 80 C upto the limit of Rs. 1,00,000.

- Marks : 2

(A) only is correct Correct Answer

(A) & (B) both are wrong.

(A) & (B) both are correct

(B) only is correct.

14) A recognised Provident Fund acquires its status on recognition by ___________. 2

- Marks :

SEBI Correct Answer

Income Tax authorities

PF Commissioner

Labour Ministry

15) Madhu is in the business of buying houses, fixing them up and reselling them at a profit. She is considering purchasing a house but knows that she has to invest Rs. 2,50,000 at the end of the first month and Rs. 50,000 at the end of 6 months to restore the house before selling it. She expects to sell the house at the end of 18 months for Rs. 17,60,000. If Madhu requires a 25% compounding monthly on her investments and there is a 6% real estate brokerage payable for these transactions (buy & sell), what is the maximum amount she can offer to buy the house ?

- Marks : 4

Rs. 9,06,880 Correct Answer

Rs. 8,04,114

Rs. 8,72,850

Rs. 8,52,360 16) If an employer has made contribution to an unrecognized provident fund of an employee, then such contribution in the hands of employee ____________.

- Marks : 1

is not treated as income of the year in which contribution is made

Correct Answer

contributions in excess of 12% is treated as income

is treated as income of the year in which contribution is made

None of the above 17) Nihal, a salaried employee, receives medical allowance of Rs. 25,000 from his employer which is fully spent by Nihal in meeting medical expenses for himself. Determine the taxable amount of the medical allowance.

- Marks : 1

Rs. 10,000. Correct Answer

Rs. 25,000.

NIL

Rs. 15,000.

18) For a person aged 25 years retirement needs may best be calculated by _____________. Marks : 1

Income replacement method

Correct Answer

Expense replacement method

Both

None of the above.

19) Pension received from a former employer is classified under the head _________. 1

- Marks :

Gratuity

Income from other sources Correct Answer

Salary

Capital Gains 20) Which one of the following statements is NOT true for a defined-benefit plan? (A) Favours older participants (B) Arbitrary annual contribution (C) Requires an actuary

- Marks : 1

(A) only Correct Answer

(B) only

(C) only

None of the statements 21) Senior Citizen's Savings Scheme introduced by the Government of India is governed by which Act?

- Marks : 1

The Companies Act, 1956

The Small Savings & Misc. Savings Act, 1902

The Banking Regulation Act, 1949 Correct Answer

The Government Savings Bank Act, 1873

22) An establishment, with 25 employees is covered under Employees Provident Fund and Miscellaneous Provision Act, 1952. What percentage of employee's pay shall be contributed by the employer in Employee's Pension Fund?

- Marks : 1

8.33%

Correct Answer

1.16%

3.67%

12%

23) Computing 'salary' for the purpose of 'Rent free accommodation' includes ____________. Marks : 1

bonus

advance salary

both bonus and advance salary

None of the above 24) Which of the following is a reasonable assumption to make about the understanding of a client on the Financial Planning process?

- Marks : 1

Client would have identified a desirable asset allocation.

Client would have some knowledge of the assumptions on which Financial Plans are made. Correct Answer

Client would be able to identify his/her financial goals.

Client would understand the financial products being recommended. 25) While presenting and reviewing a Financial Plan to the client, you would do all of the following except ______.

- Marks : 1

presenting the plan in writing to the client Correct Answer

expressing your opinion as a matter of fact

taking the client through the plan

sharing the assumptions on which the plan is made

26) A client should be helped to set his/her financial goals in _________.

- Marks : 1

current money terms

Correct Answer

future money terms

both current & future money terms

None of the above 27) A Financial Planner identifies and distinguishes between the needs and wants of the client. Priority should be given to __________.

- Marks : 1

Equal priority should be given

No need to give any priority Correct Answer

Needs

Wants 28) Suresh, a Certified Financial Planner, is preparing a letter to circulate among prospective clients and the letter contains information on services provided by his firm. According to the Code of Ethics and Rules of Professional Conduct, all of the following information should appear in the letter except ________. 1

- Marks :

details of firm's portfolio size and composition

Correct Answer

the fees and commission sources of the firm

any significant financial relationships or connections with product providers

identity of the firm providing the service and the nature of services offered

29) Interest rate on Post Office Savings Bank is payable__________.

- Marks : 1

quarterly

half yearly Correct Answer

annually

monthly 30) Deficit financing provision in the Budget will lead to the following/s: (A) Increase in money supply and rise in prices of goods and services in market(B) Fall in national income and Increase in GDP.

- Marks

:1

(A) only.

Correct Answer

Both (A) & (B)

(b) only

None of the above

31) The process of retirement planning would generally not involve ________.

- Marks : 1

making a plan for management & disposition of assets at death

projecting individual needs and goals into the future and making sound financial plan Correct Answer

concentrating on maximizing returns on Present / Past Investments

planning for staying physically healthy & making necessary psychological adjustment and to plan for housing and leisure / work