FPSB INDIA FORMAT MOCK TEST Question bank (Case Study A)- Ref date 01/04/17

1) Ashwin shared that his Housing loan interested was revised upward 100 basis point on 1/10/13 and further 150
basis upward revision on 01/04/15. Also informed that he enrolled in distance learning Global Project
Management course last year and he took Education Loan from bank 5L 01/02/17 Interest rate 10%, Tenor 8
year and paying EMI from beginning from next month. He would like to know about current FY 17 -18 tax
liability. (Mark 5) (tax liability : 199550)

2) Assume that Mr. Ashwin has got transferred to Nasik with an immediate effects and company offers him Rent
free accommodation in lieu of HRA however Ashwin pays Rs. 3000/- concession rent to his company. The
apartment is owned by company & also provides consumer durables cost Rs.1,00,000/-. Mr. Ashwin wants to
know that taxable value of RFA & furniture perquisite. (As per 2001 population census, the city population was 08
Lakh, Depreciated value of furniture/consumer durables Rs. 87,220) (Mark 3) (RFA : 67060)

3) Ashwin wants to know life insurance cover he needs in case of he is no more. He wants that his family should
have the same life style. He wants corpus available to pay off all outstanding liabilities and also wants to protect
childern’s higher education and marriage goals in case of an unfortunate death. Assume life insurance claim
proceeds are invested by sumedha in a Balance fund. (Note: He is conservative expects 1% less return in a
balance fund & 2% excess inflation for children higher education & Marriage expenses) (Mark 5) (28197269)

4) Ashwin wants to know that additional life cover required today in case he is no more…He has informed you that
annual growth in his income expects 10% P.A for 1 st 10 years and post 8% pa till retirement. His self expenses
30% of household expenses and taxes payable Rs. 1,00,000. Post death Sumedha will invest corpus in 30%
balanced fund & 70% in Debt instruments.(Mark 4) (3.66 cr)

5) Ashwin wants to know that approximate surplus/deficit amount in the retirement corpus once he has earmark
PPF a/c (Post retirement corpus will be invested in Debt Instruments). You have advised to invest the maximum
amount beginning of every year as per current guideline. You have further advised to extend the PPF a/c for
three Blocks and also invest max. Amount end of every year during extended period. The maturity value of
extended PPF A/C will be invested in riskfree instruments till retirement. (Mark 4) (deficit : 42154530)

6) You have suggested Mr. Ashwin to start a monthly investment on an immediate basis for Prateek and Aslia’s
higher education till age 22 of Aslia as below in an Equity and Debt fund. He wants to know monthly SIP required
in Equity & Debt fund?(5)

New investment and portfolio rebalanced as per below asset allocation on specific intervals.

95:05 (E:D) for 1st four years

75:25 (E:D) for next four years

50:50 (E:D) for next four years.

25:75 (E:D) till prateek’s age of 18

100% debt fund post age of 18 of Pratik.

Note: You have further advised to increase monthly SIP every year by 8%, in line with his expected income
growth. (sip = 12290)

7) Calculate immediate annual investment required till one year before the retirement to build the retirement corpus
for Mr. Ashwin. (Post retirement corpus will be investing 30% to debt fund, 20% in a balanced fund, 20% Gold
ETF and 30% diversified equity fund) (Ignore taxation and expenses) ( Mark 5)

He will increase his annual investment 7.5% P.A. as per his income growth.
 You have suggested below asset allocation for investment

1st 10 years 70% Equity and 30% Gold ETF

2nd 10 years 60% Equity and 40% Gold ETF

Balance years in 40% equity and 60% Gold ETF

(240332)

8) You have suggested earmarking the 20% & 30% of an existing share portfolio for Pratik and aslia’s marriage. You
have suggested weekly step up SIP (Annual Growth rate 5%pa) in existing Balanced Mutual fund till Aslia’s
marriage?
Ashwin wants to know SIP required today? ( Mark 3) (weekly sip : 1544)

9) Ashwin requires Rs.1, 00,000 beginning of every year till retirement for annual Diwali vacation expenses and post
retirement, he wants Rs.2, 00,000 every year till his life time. He wants to know how much additional monthly
SIP required in existing debt fund till his retirement. (Note Vacation cost is expected to escalate 8%PA) ( Mark 3)
(sip: 47560)

10)An investment analyst has told Ashwin to invest in a portfolio after evaluating on the following
Parameters-
(1) The performance of portfolio adjusted by the return of risk free assets over the risk of portfolio
(2) Measure of the volatility in a portfolio as compared to the entire market (index) as a whole
(3) Measure excess return on an investment over the benchmark with same degree of risk
(4) The proportion of variability in a portfolio compare to benchmark
(5) Measure of how many individual elements tend to deviate from the average

The analyst also used a lot of terminology which confused Ashwin. He wants to know how the
terminology used fits into these evaluation parameters. You advise the terminology, respectively,
as_______. (Mark 3)

A) Sharpe Ratio, Beta, Alpha, R- Squared, Standard Deviation,

B) Sharpe Ratio, Beta, Standard Deviation, Alpha, R-Squared.
C) Alpha, R-Squared, Standard Deviation, Sharpe Ratio, Beta.
D) R-Squared, Sharpe Ratio, Standard Deviation, Alpha, Beta.

11) Ashwin wants to know how you will ensure that information and relevant documents given to or Gathered by you
are securely stored? This would be is accordance to FPSB India's Rules that relate to the Code of Ethics of
_____________. (Mark 2)

A) Compliance & Diligence

B) Diligence & Compliance
C) Fairness
D) Professionalism

12) Ashwin has received few gifts in the financial year 2016-17 and he wants to know about the taxation of the same.
He received a cash gift of Rs. 33,000 from a friend, another gift in kind of Rs. 14,000 from his neighbor and Rs.
75,000 from his father. He wants to know, what is the total taxable amount from the above receipts on which ashwin
will have to pay tax in FY 16-17. (Mark 2)

A) Rs. 122,000, as any amount received in excess of Rs. 50,000 is taxable.

B) Rs. 72,000, as the amount received over the limit of Rs. 50,000 is taxable.
C) Rs. NIL, as 47,000 from 3rd party within limit of Rs. 50,000/- and Rs. 75,000 gift from his father so not taxable
D) Rs. 47000

13) Ashwin has informed you that he has not filed his Income Tax return for the FY 2013-14 within due date. He
wants to know from you till which date he can furnish his belated return. (Mark 2)

A) 31st March 2014 or before the completion of his assessment, whichever is earlier.
B) 31st March 2015 or before the completion of his assessment, whichever is earlier.
C) 31st March 2016 or before the completion of his assessment, whichever is earlier.
D) 31st March 2017 or before the completion of his assessment, whichever is earlier.

14) Sometimes back Ashwin’s investment advisor also a CFP, recommended him a savings product stating that it offered an assured annual
return of 12%. He was skeptical about the returns and did not invest. You realize that the product has been misrepresented. In reality, it
is the simple rate of interest with a lock in period of 10 years. According to you, The advisor has violated the code of ethics of
_________________________

a) Code of Objectivity

b) Fairness

c) Integrity

d) Professionalism

Q 15: Mr. A invested Rs 50000 pa in debt mutual fund which gives 8.5% return pa. Investment will increase at 10%
pa. Mr. B is investing Rs 40000 pa in the same debt fund along with investing Rs 10000 pa in growth equity fund
which gives return of 11% pa with same growth rate in investment and for the same investment period. The
difference between the effective return earned is 20 years Period Is ?

A) 0.5% B) 0.25% C) 0.56% D) 0.60%