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

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

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Mr. Kumar works at a private company and earns Rs 8 lakhs a year. He spends Rs 7 lakhs of that each year. His stockbroker suggested an investment with a 13% return, and he wants to invest Rs 40,000 in it. To do this, he’ll borrow money at 9% interest, using a leverage of 1.5. He already has life insurance policies worth Rs 35 lakhs, a housing loan of Rs 30 lakhs, and other investments expected to grow at 9%. The inflation rate is expected to be 7.5%. Mr. Kumar is 42 years old, plans to retire at 60, and hopes to live until he’s 70.

Q)If Mr. Kumar implements his plan of investments using leveraged money for the new investment, what will be his return on equity?

a) 19%

b) 22%

c) 20%

d) 16%

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2. Mr. Kumar works at a private company and earns Rs 8 lakhs a year. He spends Rs 7 lakhs of that each year. His stockbroker suggested an investment with a 13% return, and he wants to invest Rs 40,000 in it. To do this, he’ll borrow money at 9% interest, using a leverage of 1.5. He already has life insurance policies worth Rs 35 lakhs, a housing loan of Rs 30 lakhs, and other investments expected to grow at 9%. The inflation rate is expected to be 7.5%. Mr. Kumar is 42 years old, plans to retire at 60, and hopes to live until he’s 70.

Q)The company in which Mr. Kumar was planning to invest based on his stockbroker’s recommendation and in which he would have got a 13% return, is now offering only a 9% return. What will be his returns now?

a) 6%

b) 0%

c) 9%

d) 9.6%

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3. Mr. Kumar works at a private company and earns Rs 8 lakhs a year. He spends Rs 7 lakhs of that each year. His stockbroker suggested an investment with a 13% return, and he wants to invest Rs 40,000 in it. To do this, he’ll borrow money at 9% interest, using a leverage of 1.5. He already has life insurance policies worth Rs 35 lakhs, a housing loan of Rs 30 lakhs, and other investments expected to grow at 9%. The inflation rate is expected to be 7.5%. Mr. Kumar is 42 years old, plans to retire at 60, and hopes to live until he’s 70.

Q)What is the discount rate for working out Mr. Kumar’s Insurance plan ?

a) 1.501%

b) 1.395%

c) 1.756%

d) 2.000%

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4. Mr. Kumar works at a private company and earns Rs 8 lakhs a year. He spends Rs 7 lakhs of that each year. His stockbroker suggested an investment with a 13% return, and he wants to invest Rs 40,000 in it. To do this, he’ll borrow money at 9% interest, using a leverage of 1.5. He already has life insurance policies worth Rs 35 lakhs, a housing loan of Rs 30 lakhs, and other investments expected to grow at 9%. The inflation rate is expected to be 7.5%. Mr. Kumar is 42 years old, plans to retire at 60, and hopes to live until he’s 70.

Q)What is Mr. Kumars HLV (Human Life Value) ?

a) Rs. 1,39,77,987

b) Rs. 2,14,74,744

c) Rs. 1,26,62,575

d) Rs. 2,22,78,634

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A businessman aims to save Rs. 50 lakhs for his daughter’s wedding in 10 years. He plans to invest money every month to reach this goal. I recommend dividing his monthly investments between stocks (equity) and bonds (debt) in a 65:35 ratio for the first 9 years. In the last year, he should move the entire accumulated amount to a liquid fund. The expected annual returns for stocks, bonds, and liquid funds during this period are 12%, 9%, and 5%, respectively.

Q)What would be the corpus at the end of 9 years?

a) Rs 45,61,904.76

b) Rs 47,61,904.76

c) Rs 46,61,904.76

d) Rs 48,61,904.76

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Q)What is the Portfolio Return of Equity and Debt invested in the ratio of 65% and 35%?

a) 11%

b) 12%

c) 10.95%

d) 10.5%

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Q)What approximate amount per month is required to be allocated to equity and debt schemes?

a) Rs 9183, Rs 17239

b) Rs 9283, Rs 17239

c) Rs 17239, Rs 9283

d) Rs 13000, Rs 15000

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Q)Assuming that the Investors belongs to Highest Tax Slab, Calculate the amount to be invested in Liquid Funds so that the post tax return is Rs 50 Lakhs.

a) Rs 48,30,917.87

b) Rs 49,30,917.87

c) Rs 47,30,917.87

d) Rs 46,30,917.87

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Mr. Krishna already has health insurance from his employer, with coverage up to Rs 5 Lakhs. However, he thinks this might not be enough. After learning about Top-up and Super Top-up plans from a friend, he wants to add an extra coverage of Rs 10 Lakhs, with a deductible of Rs 5 Lakhs. Can you help him with the following questions?

Q)Suppose if there is a single claim of Rs 8 Lakhs. How the claim amount will be paid in case of Topup Policy ?

a) Rs. 8 Lakhs will be paid from Topup Plan

b) Rs. 5 lakhs will be paid from Employer Health Insurance. No limit left in the Employer plan. Rs. 3 lakhs will be paid from the Top up plan after the Deductible of Rs. 5 lakhs is applied. Balance limit left in the Top up plan is Rs. 7 lakhs

c) It is the choice of Krishna. He can use whichever policy he wants.

d) Rs. 3 Lakhs will be paid from Employer Health Insurance. Rs.5 Lakh will be paid from Topup policy

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10.

Q) Suppose in the same year there are 2 claims. The first claim of Rs. 3 lakhs.The second claim of Rs. 6 lakhs. How much will he have to pay out of his pocket in case of a Second claim in case of a Topup Policy?

a) Mr.Krishna will not pay anything. Entire 6 Lakhs will be paid from Topup Policy since the claim amount exceeds Deductible of Rs 5 Lakhs

b) Rs.2 Lakhs will be paid from Employer Plan. No limit will be left after this payment in Employer Plan since Rs 3 Lakhs was used earlier for First Claim. Remaining Rs 4 Lakhs will be paid from Topup Plan.

c) Mr.Krishna will not pay anything. Rs 5 Lakhs shall be paid from Employer Insurance and Rs 1 Lakh shall be paid from Topup policy

d) Mr.Krishna will pay Rs.3 Lakhs. Employer insurance plan will pay Rs.2 Lakhs. Topup Policy will pay Rs.1 Lakh. Balance in the topup policy is Rs.9 Lakhs

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