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NISM Series X-A: Investment Adviser (Level 1) Cert. 'Case Study 2'

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NISM Series X-A: Investment Adviser (Level 1) Case study-2

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1.

Here is Mr. Anil’s current financial situation:

  1. House: Originally valued at Rs 25 lacs, now valued at Rs 40 lacs.
  2. Equity Shares: Rs 7 lacs
  3. Debentures: Rs 3 lacs
  4. Long Term Fixed Deposits: Rs 10 lacs
  5. Short Term Bank Fixed Deposits: Rs 2 lacs
  6. Car: Rs 4 lacs
  7. SUV: Rs 6 lacs
  8. Open Ended Equity Schemes: Rs 6 lacs
  9. Open Ended Debt Schemes: Rs 5 lacs
  10. Liquid Schemes: Rs 5 lacs
  11. Saving Bank Account: Rs 1 lac

Liabilities:

  1. Housing loan: Rs 12 lacs
  2. Loan from friends: Rs 5 lacs
  3. Vehicle loan: Rs 4 lacs
  4. Credit card outstanding: Rs 1 lac

      Q)What is Mr. Anil’s leverage ratio ?

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2.

Here is a summary of Mr. Anil’s financial situation:

Assets:

  1. House: Originally valued at Rs 25 lacs, current value Rs 40 lacs.
  2. Equity Shares: Rs 7 lacs
  3. Debentures: Rs 3 lacs
  4. Long Term Fixed Deposits: Rs 10 lacs
  5. Short Term Bank Fixed Deposits: Rs 2 lacs
  6. Car: Rs 4 lacs
  7. SUV: Rs 6 lacs
  8. Open Ended Equity Schemes: Rs 6 lacs
  9. Open Ended Debt Schemes: Rs 5 lacs
  10. Liquid Schemes: Rs 5 lacs
  11. Saving Bank Account: Rs 1 lac

Liabilities:

  1. Housing loan: Rs 12 lacs
  2. Loan from friends: Rs 5 lacs
  3. Vehicle loan: Rs 4 lacs
  4. Credit card outstanding: Rs 1 lac

Q)Calculate the value of Mr. Anil’s liquid assets.

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3.

Here is an overview of Mr. Anil’s financial situation:

  1. House: Originally valued at Rs 25 lacs, currently valued at Rs 40 lacs.
  2. Equity Shares: Rs 7 lacs
  3. Debentures: Rs 3 lacs
  4. Long Term Fixed Deposits: Rs 10 lacs
  5. Short Term Bank Fixed Deposits: Rs 2 lacs
  6. Car: Rs 4 lacs
  7. SUV: Rs 6 lacs
  8. Open Ended Equity Schemes: Rs 6 lacs
  9. Open Ended Debt Schemes: Rs 5 lacs
  10. Liquid Schemes: Rs 5 lacs
  11. Saving Bank Account: Rs 1 lac

Liabilities:

  1. Housing loan: Rs 12 lacs
  2. Loan from friends: Rs 5 lacs
  3. Vehicle loan: Rs 4 lacs
  4. Credit card outstanding: Rs 1 lac

Q)Calculate the Networth of Mr. Anil.

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4.

Here’s a breakdown of Mr. Anil’s financial situation:

  1. House: Initially valued at Rs 25 lacs, currently valued at Rs 40 lacs.
  2. Equity Shares: Rs 7 lacs
  3. Debentures: Rs 3 lacs
  4. Long Term Fixed Deposits: Rs 10 lacs
  5. Short Term Bank Fixed Deposits: Rs 2 lacs
  6. Car: Rs 4 lacs
  7. SUV: Rs 6 lacs
  8. Open Ended Equity Schemes: Rs 6 lacs
  9. Open Ended Debt Schemes: Rs 5 lacs
  10. Liquid Schemes: Rs 5 lacs
  11. Saving Bank Account: Rs 1 lac

Liabilities:

  1. Housing loan: Rs 12 lacs
  2. Loan from friends: Rs 5 lacs
  3. Vehicle loan: Rs 4 lacs
  4. Credit card outstanding: Rs 1 lac

Q)Liquid assets to Networth ratio of Anil is 11.95%. This ratio signifies all of the following except.

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5.

Here is an overview of Mr. Anil’s financial situation:

  1. House: Originally priced at Rs 25 lacs, currently valued at Rs 40 lacs.
  2. Equity Shares: Rs 7 lacs
  3. Debentures: Rs 3 lacs
  4. Long Term Fixed Deposits: Rs 10 lacs
  5. Short Term Bank Fixed Deposits: Rs 2 lacs
  6. Car: Rs 4 lacs
  7. SUV: Rs 6 lacs
  8. Open Ended Equity Schemes: Rs 6 lacs
  9. Open Ended Debt Schemes: Rs 5 lacs
  10. Liquid Schemes: Rs 5 lacs
  11. Savings Bank Account: Rs 1 lac

Liabilities:

  1. Housing loan: Rs 12 lacs
  2. Loan from friends: Rs 5 lacs
  3. Vehicle loan: Rs 4 lacs
  4. Outstanding Credit Card balance: Rs 1 lac

Q)Calculate Mr. Anil’s solvency ratio.

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6.

Mr. Gupta, an Indian resident, regularly invests in Mutual Funds. He currently has an ongoing Systematic Investment Plan (SIP) valued at Rs 2,00,000. In this SIP, he contributes Rs 25,000 per month, and this will continue for the next 12 months. The expected yield on this SIP is 1% per month.

Anticipating additional funds, Mr. Gupta plans to initiate a new SIP of Rs 12,000 per month for 18 months. This new SIP is projected to yield 1.25% per month.

Mr. Gupta has a son named Pranav, and he intends to send Pranav to the USA for higher studies in the field of medical sciences. The estimated expenses for Pranav’s studies amount to Rs 20,00,000, and these expenses are expected to increase by 10% per annum over the next 5 years. Additionally, it is anticipated that the Indian rupee may depreciate by 3% against the USD during this period.

Q)What will be the value of Mr. Gupta’s ongoing SIP in one year ?

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7.

Mr. Gupta, a resident of India, regularly invests in Mutual Funds. He currently has an ongoing Systematic Investment Plan (SIP) valued at Rs 2,00,000. In this SIP, he contributes Rs 25,000 per month, and this will continue for the next 12 months. The expected yield on this SIP is estimated to be 1% per month.

Anticipating additional funds, Mr. Gupta plans to start a new SIP of Rs 12,000 per month for 18 months. This new SIP is expected to yield 1.25% per month.

Mr. Gupta has a son named Pranav, and he plans to send Pranav to the USA for higher studies in the field of medical sciences. The estimated expenses for Pranav’s studies are Rs 20,00,000, and these expenses are projected to increase by 10% per annum over the next 5 years. Additionally, it is anticipated that the Indian rupee may depreciate by 3% against the USD during this period.

Q)What will be the value of Mr. Gupta’s ongoing SIP in one year ?

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8.

Mr. Gupta, a resident of India, regularly invests in Mutual Funds. He currently has an ongoing Systematic Investment Plan (SIP) valued at Rs 2,00,000. In this SIP, he contributes Rs 25,000 per month, and this contribution will continue for the next 12 months. The expected yield on this SIP is estimated to be 1% per month.

Anticipating additional funds, Mr. Gupta plans to initiate a new SIP of Rs 12,000 per month for 18 months. This new SIP is projected to yield 1.25% per month.

Mr. Gupta has a son named Pranav. He intends to send Pranav to the USA for higher studies in the field of medical sciences. The anticipated expenses for Pranav’s studies are Rs 20,00,000, and these expenses are expected to increase by 10% per annum over the next 5 years. Additionally, it is likely that the Indian rupee may depreciate by 3% against the USD during this period.

Q) Mr. Gupta plans to start a new SIP of Rs 12000 pm. What will be its value at the completion of SIP period ?

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9.

Mr. Gupta, residing in India, regularly invests in Mutual Funds. His existing Systematic Investment Plan (SIP) is presently valued at Rs 2,00,000. In this SIP, he contributes Rs 25,000 per month, and this will continue for the next 12 months. The anticipated yield on this SIP is estimated to be 1% per month.

Expecting additional funds, Mr. Gupta is planning to initiate a new SIP of Rs 12,000 per month for 18 months. This new SIP is expected to yield 1.25% per month.

Mr. Gupta’s son, Pranav, is the reason behind his financial planning. Mr. Gupta intends to send Pranav to the USA for higher studies in the field of medical sciences. The estimated expenses for Pranav’s studies are Rs 20,00,000, and these expenses are projected to increase by 10% per annum over the next 5 years. Additionally, it is anticipated that the Indian rupee may depreciate by 3% against the USD during this period.

Q)What is the amount Mr. Gupta will need in five years for his son Pranav’s education ?

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10.

Mr. Srinivas, a well-respected and successful registered investment advisor, has experienced significant growth in his business over the past year, with a client base exceeding 150. To manage this expansion, he has hired more qualified staff. While assessing his business, he realizes that his net worth meets the minimum requirement set by SEBI regulations, but he may need to increase it if his business continues to grow.

It’s worth noting that Mr. Srinivas and his sister, who is involved in mutual fund distribution, maintain financially independent businesses. However, they do provide advisory services to each other’s businesses. Additionally, one of Mr. Srinivas’s clients, Ms. Rohini, has expressed interest in the Portfolio Management Scheme (PMS) distributed by Mr. Srinivas’s sister.

Now, let’s address specific questions regarding SEBI Investment Advisors Regulation – 2013.

Q)Ms. Rohini, who is a client of Mr. Srinivas, is requesting Mr. Srinivas to execute her mutual fund investments and she has expressed her willingness to pay additionally for this service. What do the rules say regarding this aspect ?

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