AFP Workbook- Old Curriculum.

Inflation expected post-retirement 5.00% p.a. Period for which money would be needed in 35 yrs 2nd calculation 85-55+5 Retirement corpus ₹ 65,019,662 PV((1+6.5%)/(1+5%)-1,35,-2340209,0,1) Curtailment of expenses required on retirement 22% ((1-(50952803/65019662)) 22% Q8 C) ₹ 29,310 (Solution given below) Current expenses for heads considered for retirement 840,000 ₹ p.a. Inflation expected throughout 5.00% p.a. Urvashi's working years (retirement at 55, 21 yrs current age 34) Living expenses needed on retirement 1,404,125 ₹ p.a. (60% of pre-retirement) 840000*60%*(1+5%)^21 No. of years retirement income stream required 30 yrs (up to age 85) Yield of designated retirement fund post retirement 6.50% p.a. Retirement Corpus estimation: Required Corpus for living expenses at age 55 years 34,551,813 ₹ PV:1 PV((1+6.5%)/(1+5%)-1,30,-1404125,0,1) ₹ 1 crore (gifts) provisioned in the corpus needed 2,837,970 ₹ PV:2 20 years later 10000000/(1+6.5%)^20 ₹ 1 crore (charity) provisioned in the corpus needed 1,511,861 ₹ PV:3 30 years later 10000000/(1+6.5%)^30 Total Corpus needed to be accumulated 38,901,644 ₹ (PV:1+2+3) Suppose, a total monthly amount of ₹ 100 is invested in the asset allocation of equity and debt components cumulatively Accumulation to meet the Retirment Corpus: Demat account Equity Shares: Current balance 2,392,000 Accumulation in 16 years, 5 years to retirement ₹ 12,703,659 (considering 11% p.a. in first 5 yrs) 2392000*(1+11%)^16 Accumulation of this up to retirement (next 5 years) ₹ 17,405,114 in 6.5% yield fund 12703659*(1+6.5%)^5 Balance to be accumulated through Asset Allocation ₹ 21,496,530 Fund up to 50 years 38901644-17405114 First Five years: Asset Allocation Page # 151

Equity Returns 11.00% p.a. Debt returns 7.50% p.a. Equity investment per month 70 ₹ p.m. Debt investment per month 30 ₹ p.m. Equity component accumulation in 10 years ₹ 14,870 FV((1+11%)^(1/12)-1,10*12,-70,0,1) Debt component accumulation in 5 years ₹ 5,298 FV((1+7.5%)^(1/12)-1,10*12,-30,0,1) Total accumulation in asset allocation after 5 years ₹ 20,168 14870+5298 Next six years: Rebalanced Asset Allocation Rebalanced Equity component accumulated (40%) ₹ 8,067 20168*40/100 Rebalanced Debt component accumulated (60%) ₹ 12,101 20168*60/100 Revised Equity investment per month 40 ₹ p.m. Revised Debt investment per month 60 ₹ p.m. Equity component accumulation in total 16 years ₹ 19,110 FV((1+11%)^(1/12)-1,6*12,-40,- 8067,1) Debt component accumulation in total 16 years ₹ 24,100 FV((1+7.5%)^(1/12)-1,6*12,-60,-12101,1) Total accumulation in asset allocation (in 16 yrs) ₹ 43,210 19110+24100 Last Five years: 6.5% p.a. Yield Retirement Fund Monthly investment (doubled) 200 ₹ p.m. Investment accumulated up to retirement ₹ 73,342 FV((1+6.5%)^(1/12)-1,5*12,-200,- 43210,1) Actual monthly investment equivalent to ₹ 100 ₹ 29,310 (21496530/73342)*100 Q9 A) The principal amount is protected on maturity, and is repaid inflation adjusted. The annual coupons would be 1.5% of such periodically adjusted principal amount in tune with inflation index. Q10 A) 11% p.a. (Solution given below) Current cost of world tour vacation ₹ 1,000,000 Cost escalation for such vacation 5.00% p.a. Page # 152

Vacation fund required when due in 10 years ₹ 1,628,895 1000000*(1+5%)^10 Expected date when vacation fund is to be utilized 1-Apr-2027 Date of switch from the asset allocation fund to risk free 1-Apr-2024 instruments Rate of return from risk free instruments 5.50% p.a. Required value in asset allocation fund before ₹ 1,387,189 switch to risk free (3 years prior) 1628895/(1+5.50%)^3 This is to be accumulated until 1-Apr-2025 by investing ₹ 1.05 lakh in 6 installments on 1-Apr-2018, 1-May-2018, --- --- --- , 1-Sep-2018. The return to be obtained in asset allocation fund is calculated by finding xirr 1-Apr-19 -105,000 1-May-19 -105,000 1-Jun-19 -105,000 1-Jul-19 -105,000 1-Aug-19 -105,000 1-Sep-19 -105,000 1-Apr-26 1,387,189 11% XIRR(C125:C131,B125:B131) Q11 B) 28% (Solution given below) PPF account is opened on 21-Dec-2009 Initial maturity of PPF account due on 31-Mar-2025 15 years from close of FY in which a/c opened PPF account balance as on 31-Mar-2019 ₹ 659,000 Amount to be invested on 1st April every year ₹ 150,000 (beginning 1-Apr-2019) Rate of interest (expected in the long term) on PPF 7.75% p.a. account Accumulated amount on initial maturity (31-Mar-2027) ₹ 2,901,052 FV(7.75%,8,-150000,-659000,1) Current age of Dhruvi (on 1-Apr-2019) 9 years Funds for professional course required (on 1-Apr-2032) 22 years 1st extended 5-year term (from 1-Apr-2027 to 31-Mar-2032) Maturity on 31-Mar-2032 after the 1st extended term ₹ 5,156,963 with similar investments FV(7.75%,5,-150000,-2901052,1) Page # 153

Current cost of professional course ₹ 2,500,000 Cost escalation for professional course expenses 9% p.a. Estimated outlay for professional course when due ₹ 7,664,512 (in 13 years) 2500000*(1+9%)^13 A sum equivalent to 50% of required amount ₹ 3,832,256 withdrawn from PPF account 7664512/2 Remaining amount in PPF A/c. ₹ 1,324,707 5156963-3832256 PPF account extended for 5 more years without ₹ 1,924,005 further contribution, grows to 13424707*(1+7.75%)^5 Marriage age of Dhruvi (tentatively on 1-Apr-2036) 27 years Current cost of marriage ₹ 2,000,000 Cost escalation for marriage expenses 7% p.a. Estimated outlay for marriage when due (in 18 years) ₹ 6,759,865 2000000*(1+7%)^18 Funds available as a percentage of marriage cost then 28% (1924005/6759865)*100% Q12 A) ₹ 16,270 per month incremental SIP in Equity MF schemes (Solution given below) Escalation of ₹ 1.5 lakh and ₹ 2 lakh expenses 10% p.a. Return from Debt schemes 7.5% p.a. Return from Equity schemes 11% p.a. Suryansh's current age is 14 years. After the current year expenses, the required expenses in the 3- year block would be ₹ 2 lakh p.a. for 3 years (age 15,16,17). Dhruvi's current age is 9 years. After the current year expenses, the required expenses in the 3- year block would be ₹ 1.5 lakh p.a. for 3 years (age 10,11,12). PV of 3 year block expenses when they are due after ₹ 1,099,599 the current year in debt PV((1+7.5%)/(1+10%)-1,3,- 350000*(1+10%),0,1)/(1+7.5%) Debt MF schemes value today ₹ 579,000 Required money to be switched from equity ₹ 520,599 schemes today 1099599-579000 Equity MF schemes value today (before switch) ₹ 1,545,000 Equity MF schemes value today (after switch) ₹ 1,024,401 1545000-520599 SIP amount in Equity schemes 25,000 ₹ p.m. Page # 154

Accumulated value in equity schemes after 4 years ₹ 3,050,877 FV((1+11%)^(1/12)-1,4*12,-25000,- 1024401,1) SIP amount in Debt schemes ₹ 15,000 p.m. Accumulated value of SIP in debt schemes after 4 years ₹ 837,473 FV((1+7.5%)^(1/12)-1,4*12,-15000,0,1) Funds required to be available after 4 years in Debt schemes for Dhruvi's remaining five years basic education expenses (age 13,14,15,16,17) Education expenses at age 13 of Dhruvi (after 4 years) ₹ 219,615 150000*(1+10%)^4 PV of expenses for Dhruvi's basic education at her age ₹ 1,240,980 14,15,16,17 @ ₹ 2 lakh p.a. in debt schemes PV((1+7.5%)/(1+10%)-1,4,- after 4 years 200000*(1+10%)^5,0,1)/(1+7.5%) The value of funds as assessed after 4 years for ₹ 1,460,595 Dhruvi's education 219615+1240980 Shortfall in Debt schemes after 4 years ₹ 623,122 1460595-837473 Funds remaining in equity schemes after effecting switch ₹ 2,427,755 to Debt after 4 years 3050877-623122 Funds required for Suryansh’s higher education expenses ₹ 3,401,222 after 4 years 2500000*(1+8%)^4 Shortfall in total funds available, which is needed to be ₹ 973,468 accumulated through incremental SIP in equity 3401222-2427755 Therefore, incremental SIP in equity schemes ₹ 16,270 ((1+11%)^(1/12)‐1,48,0,973468, 1) Q13 A) Such a Trust shall protect assets transferred and shall manage them as per guidelines issued to the trustee until either or both of her children reach/es a specified age to be defined by Urvashi Q14 C) ₹ Long term capital gains of ₹ 5,68,932 ; Income from other sources ₹ 26,820 (Solution given below) Purchase cost of jewellery in 2005‐06 ₹ 215,000 Sale proceeds in April 2019 ₹ 1,100,000 CII for 2005‐06 117 CII for 2019‐20 289 Indexed cost of acquisition 531068 [215000*(289/117)] Long‐term capital gains 568932 (1100000‐531068) LTCG Tax @20.8% 118338 (568932*20.8%) Net of tax proceeds from sale of jewellery 981662 Page # 155

Current quoted price of SGB (1100000‐118338) Coupon to be received on bonds (on half‐yearly basis in Jun'19 and Dec'19) 2,800 Discount to issue price 2.50% Face value of SGB 8.50% 3,060 Number of SGBs to be bought [ 2800/(1‐8.5%)] 350.59 Interest to be received on bonds during 2019‐20 981662/2800 26,820 Taxation of these transactions in AY2020‐21 (350.59*3060*2.5%) Long term capital gains of ₹ 5,68,932 ; Income from other sources ₹ 26,820 Q15 B) 7,15,200 (Solution given below) Income under the head salaries: Basic 2,500,000 HRA 500,000 Less: exempt (See Note 1) (170,000) Other allowances 300,000 Employers's Contribution towards NPS (10% of Basic Salary) 250,000 Employers's Contribution towards NPS [Up to 10% of Basic Salary exempt (2500000*10%) from tax under Sec 80CCD(2)] 3,130,000 Total Income under the head salaries (2500000+500000-170000+300000+250000-250000) Net Total Income under the head salaries after standard deduction i.e. 50000 3080000 (3130000-50000) Income from other sources (savings account up to ₹ 10000 exempt u/s. 80TTA) 10,000 (20000-10000) fixed deposits 25,000 Income from Sovereign Gold Bonds (See Note‐2) 27,311 357*3060*2.5% Gross total income (GTI) 3,142,311 (3080000+10000+25000+27311) Less: Deductions u/s 80CCD(1) contribution NPS Tier-1 by urvashi, maximum exemption 1,500,00 u/s 80CCD(1B) contribution by Urvashi towards NPS upto ₹ 50000 50,000 u/s. 80D (restricted to maximum limit of ₹ 25,000) 25,000 Page # 156

Total deductions 225,000 Net Income 2,917,311 (3142311-225000) Tax on net income: up to ₹ 2,50,000 - ₹ 2,50,001 to ₹ 5,00,000 @ 5% 12,500 (500000-250000)*5% ₹ 5,00,001 to ₹ 10,00,000 @ 20% 100,000 (1000000-500000)*20% ₹ 10,00,001 and above @ 30% 575193 (2917311-1000000)*30% Tax payable 687693 (12500+100000+575193) Cess 27508 (687693*4%) Total tax payable 715201 ( 687693+27508) Rounded off 715200 Note‐1: House Rent Allowance exempted: Least of the following ‐ 500,000 Allowance Received 170,000 Rent Paid ‐ 10% of salary (35000*12)‐(10%*2500000) 1,250,000 (2500000*50%) 50% of salary Note‐2: Amount to be invested 1,000,000 Current quoted price of SGB 2,800 Coupon to be received on bonds (on half‐yearly basis in Jun'19 and Dec'19) 2.50% Discount to issue price 8.50% Face value of SGB 3,060 2800/(1‐8.5%) Number of SGBs to be bought 357.14 983922/2800 357 Interest to be received on bonds during 2019‐20 27,311 (357*3060*2.5%) Page # 157

Additional Questions 1. Mr. X’s parents are maintaining a joint Senior Citizen Saving Scheme account in which Mr. X is the sole nominee. Mr. X wants to know the status of the account after the demise of either of his parents. Which of the following is not appropriate in this context? (2) A) The surviving parent may operate the account alone. B) The surviving parent can receive the amount deposited and close the account. C) Mr. X, being the nominee will automatically replace the deceased parent in the joint account along with the surviving parent. D) The account may be continued for the remaining term with the surviving parent as the only holder And Mr. X as the nominee. 2. Mr. X has received an offer to sell his agricultural land for ₹ 11 Lakh. He wants to know, which of the following conditions does not hold for availing the exemption u/s 54 B of Income tax Act for capital gains arising on sale or transfer of agricultural land, if applicability of this section is foreseen. (3) A) The agricultural land is sold by Mr. X in his individual capacity. B) The agricultural land has been used by Mr. X or his parents for agriculture purposes during the 2- year period immediately preceding the date of sale. C) Mr. X will purchase another agricultural land from the amount of capital gains within a period of 2 years after the date of sale of agricultural land. D) Full consideration received from sale of agricultural land will be used in purchase of another Agricultural land otherwise proportionate capital gain would be eligible for exemption. 3. An investment analyst has told Mr. X to invest in a portfolio after evaluating on the following parameters - i) The performance of portfolio adjusted by the return of risk free assets over the risk of portfolio ii) Measure of the volatility in a portfolio as compared to the entire market (index) as a whole iii) Measure of how many individual elements tend to deviate from the average iv) Measure excess return on an investment over the benchmark with same degree of risk v) The proportion of variability in a portfolio compare to benchmark vi) The analyst also used a lot of terminology which confused Mr. X. He wants to know how the vii) Terminology used fits into these evaluation paramete₹ You advise the terminology, respectively, as_______. (3) B) Beta, Sharpe Ratio, Standard Deviation, Alpha, R-Squared. C) Sharpe Ratio, Beta, Standard Deviation, Alpha, R-Squared. D) Alpha, R-Squared, Standard Deviation, Sharpe Ratio, Beta. E) R-Squared, Sharpe Ratio, Standard Deviation, Alpha, Beta. 4. You have advised Mr. X to purchase a ₹ 50 lakh Life insurance Term Plan. Mr. X wants to know whether it is necessary to mention the details of his other Life Insurance policy purchased from Page # 158

different insurance companies. In case he fails to mention the same in the proposal form and subsequently dies due to an accident, under which principle his claim could be questioned by the Insurer, if facts of the other existing insurance policy become known to the insurance company at the time of claim settlement. (3) A) Principle of Insurable Interest B) Principle of Utmost Good Faith C) Principle of Waiver and Estoppel D) Principle of Indemnity 5. Mr. X wants to make a Will and understand its procedures; you explained that the ________ is the person responsible for offering the Will for probate. (2) A) Testator B) Executor C) Lawyer D) Beneficiary 6. You have suggested a strategy which aims to invest more when the share price falls and less when the share price rises. It is done by calculating predetermined amounts for the total value of the investment in future periods and then making an investment to match these amounts at each future period. You are indicating a technique known as _________. (3) A) Rupee Cost Averaging B) Value Averaging C) Economic Cost Averaging D) Weighted Averaging 7. Mr. X wants to purchase a Child Plan from a Life Insurance company to meet Mr. X’s educational needs. He wants to know, if he gets permanent physical disabled due to accident which would hamper his income pursuits, by what means can the policy be kept in force without payment of further premium but retaining intended benefits. You advise _________. (2) A) Payor Rider B) Dreaded Disease Rider C) Living Benefit Rider D) Survivor Purchase Option Rider 8. You have explained Mr. X that while Underwriting the Insurer may counter the effects of ____________, insurers (to the extent that laws permit) ask a range of questions and may request medical or other reports on individuals who apply to buy insurance, so that the price quoted can be varied accordingly, and any unreasonably high or unpredictable risks rejected. (2) A) Moral Hazard B) Morale Hazard C) Adverse Selection D) Uberrimaefidei 9. While preparing a Financial Plan for Mr. X you have made a forecast of his present revenues and expenditures i.e. constructed a model of how his finances might perform in the near future. You have prepared a __________. (2) A) Investment Plan Page # 159

B) Fund Flow statement C) Cash Flow statement D) Budget 10. While explaining the basics of selecting a Mutual Fund scheme you have asked Mr. X to analyse the Mutual Fund Portfolio by five main indicators that apply, one of these is __________ which is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. (2) A) R-Squared B) Alpha C) Beta D) Sharpe Ratio 11. Prior to providing any Financial Planning services, you a Financial Planning practitioner and Mr. X, as your client shall mutually define the scope of the engagement. The letter of engagement would define the scope of engagement by discussing i) Identification of the service(s) to be provided ii) Financial Planning practitioner’s compensation arrangement(s) iii) Analysis and evaluation of client’s current situation iv) Determining the clients and the Financial Planning practitioner’s responsibilities; v) Establishing the duration of the engagement; vi) Determine the strategies to achieve financial goals (3) B) i), ii), iv) and v) C) ii), iii), iv) and vi) D) i), ii), iii), iv) and v) E) i), ii), v) and vi) 12. Before beginning work on Mr. X’s Financial Plan, you have drafted a “Letter of Engagement” and Sought Mr. X’s consent on the same. Mr. X asked you about relevance of such a letter. In the context of Financial Planning Profession, you explain about the “Letter of Engagement” as a _________. A) professional requirement under Code of Ethics of FPSB India B) professional requirement under Practice Guidelines of FPSB India C) legal contract as per Contract Act 1872 D) document for his personal record 13. Mr. X Gupta wants to know according to which Act his father’s estate would be distributed in case he dies Intestate. A) Hindu Succession Act, 1956, under which people belonging to Sikh, Hindu, Buddhist, Jain religion are covered B) Hindu Succession Act, 1956, under which people belonging to Sikh, Hindu, Parsi & Jain religion are covered C) Indian Succession Act, 1925, under which people belonging to Sikh, Hindu, Buddhist, Jain & Parsi religion are covered Page # 160

D) Indian Succession Act, 1925, under which people belonging to Sikh, Hindu, Jain, Parsi, Christian & Jews religion are covered 14. Mr. X wants to know what is the best instrument to get market returns over a sufficiently long period with the least recurring cost. A) Diversified Equity Growth Mutual Fund Scheme. B) Equity Index Funds. C) Equity Shares. D) Growth Option of ULIP. 15. Mr. X saw your name with CFP Marks; he wants to know different ways in which the CFP Marks in India can be written. i) CERTIFIED FINANCIAL PLANNERCM ii) CFPCM iii) CFPCM iv) C.F.P. v) CFPCM vi) Certified Financial PlannerCM B) i) & ii) C) ii), iii), vi) D) iv), v) &vi) E) ii), v) &vi) 16. Mr. X wants to invest in ULIP, but he wants to be cautious before entering a long period of contract. As Per IRDA ULIP Guidelines, if he wants to return the policy within 15 days free look period what amount would be refunded to him? A) He shall be refunded the fund value subject to deduction of expenses towards medical examination, stamp duty and proportionate risk premium for the period of cover. B) Full Premium paid is returned back to him. C) Premium paid less commission paid to intermediary is refunded to him. D) He shall be refunded the fund value. 17. Mr. X 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 _____________. A) Integrity B) Diligence C) Compliance D) Professionalism 18. Before finalizing the Financial Plan, Mr. X tells you that she wants to entrust the estate issues to a solicitor, who is a friend of Mr. X. Which of the following is your best stand? A) Estate issues being substantial in the case, you maintain that the Financial Plan cannot be an integrated one if the same is outside your purview, hence decline. B) This is permissible subject to such an arrangement finding an explicit mention in the Financial Plan for the said activity. Page # 161

C) This is permissible subject to the advice of the solicitor being integrated into the Financial Plan and monitored along with the Plan. D) You agree to the arrangement subject to the advice of solicitor made known to you so that you modify the Financial Plan accordingly. 19. Mr. X, after seeing the use of CFPCM mark with your name, wants to know which entity in India is licensed to award CFPCM Certification. You tell him the name of organization as ________. (2) A)Financial Planning Standards Board India or FPSB India B) Financial Planning Standards Board of India C) Financial Planning Standards Board or FPSB D)Financial Planning Standards Board, India 20. While preparing Financial Plan for Mr. X you have ensured that all the significant recommendations are made in writing. If any significant recommendations are given orally, then confirmations have been given in writing. You have complied with Rule that relates to the Code of Ethics of ________. (2) A) Fairness B) Diligence C) Professionalism D) Compliance 21. You have advised Mr. X to buy a Term Insurance for his life and also for the life of M₹ X, he wants to know the importance of waiver of premium rider? (3) A) It is useless as there will not be any amount to be received from the Insurance Company at the time of maturity of the policy B) It is very useful as all future premiums would be waived by the Insurance Company in case the Life Assured becomes totally and permanently disabled C) It is same as Permanent Disablement rider hence need not be mentioned separately D) It is inbuilt with all the Term Insurance plans and thus need not be mentioned separately 22. You have mentioned to Mr. X that as you increase the tenure of insurance coverage, the premium charged per year will also increase. You are referring to which type of Life Insurance coverage? (2) A) Whole Life Insurance Plan B) Endowment Plan C) Unit Linked Insurance Plan D) Term Plan 23. Mr. X is seriously considering surrendering his policy of Unit Linked Pension Plan. What would be the tax implications of the surrender value received by him? (3) A) Any amount received will be tax free B) Amount received less the total premiums paid will be taxable at 10% C) Any Amount received will be added to his income and will be taxed accordingly D)Amount received less the index value of the premiums paid will be taxable at 20% 24. Mr. X wants to know the tax deduction on reinvestment of Interest on NSC. (3) A) Accrued interest (which is deemed as reinvested) also qualifies for deduction for 6 yea₹ Page # 162

B) Accrued interest (which is deemed as reinvested) also qualifies for deduction for first 5 year C) Accrued interest (which is deemed as reinvested) does not qualify for deduction. D) Accrued interest (which is deemed as reinvested) also qualifies for deduction for first 3 year 25. What would be the correct sequence to perform six steps of Financial Planning process to prepare a Financial Plan for Dr. X? (a) Developing and Presenting the Financial plan (b) Analyzing and evaluating the client’s financial status (c) Implementing the Financial Plan (d) Monitoring the Financial Plan (e) Establishing Client-Planner Relationships (f) Gather client data and determining Goals and Expectations (3) A) 1, 3, 4, 5, 2, 6 B) 6, 2, 5, 4, 3, 1 C) 6, 5, 2, 1, 3, 4 D) 5, 6, 2, 1, 3, 4 26. In the initial stage of Financial Plan preparation, you told Dr. M₹ X and also mentioned in the Financial Plan prepared that you would charge fixed fee for the Financial Plan construction and you would also earn commission on sale of recommended financial products, if the same is accepted. Which code of ethics binds the CFPCM Practitioner to disclose conflict of interests? (3) A) Objectivity B) Fairness C) Integrity D) Professionalism 27. Mr. X wants to understand the basics to analyze the financial statement of a company, he wants to know the ratios to look for in case he wants to know the profitability: (a) Return on assets (b) Return on equity (c) Total assets turnover ratio (d) Interest coverage ratio A) (a) and (b) B) (a), (c) and (d) C) (b) and (d) D) (b) only 28. Mr. X wants to know whether his Mutual Fund portfolio's returns are due to smart investment decisions by the fund manager or a result of excess risk. As he is of the opinion that one portfolio or fund can reap higher returns than its peers, it is only a good investment if those higher returns do not come with too much additional risk. He wants his Mutual Fund to give him better risk- adjusted performance. You would suggest him to look for ________ Ratio. A) Alpha B) Sharpe C) Beta Page # 163

D) R-Squared 29. You have suggested Mr. X to look for few important risk measures which measure different types of risks. When comparing two or more potential investments, an investor should always compare such measures. These are ________. A) CAPM, Treynor Ratio, Beta, Standard Deviation and the Sharpe Ratio B) Alpha, Beta, R-squared, Standard Deviation and the Sharpe Ratio C) Quick Ratio, Alpha, Beta, Sharpe Ratio and Retention Ratio D) Debt/Equity Ratio, Current Ratio, Sharpe Ratio, Alpha and Standard Deviation 30. Mr. X has provided his assets and liabilities statement to you during the retirement planning process. The financial statement will enable you to gain an understanding of all of the following except the__________. A) Diversification of the Mr. X's assets. B) Mr. X's net cash flow. C) Mr. X's liquidity position. D) Mr. X's debt position. 31. Which of the following would not be violation of the “Principle of Integrity” in the performance of your Professional service to Mr. X? A) Exercising reasonable and prudent judgment in dealing with Mr. X. B) Making misleading claims about the scope and areas of your competence. C) Giving the impression that you are representing the views of FPSB India. D) Engaging in conduct involving dishonesty, fraud, deceit or misrepresentation. 32. You as a CFPCM Practitioner use the CFPCM mark as a proclamation to the public that you: (a) can be trusted with the clients’ financial affairs with confidence. (b) will competently fulfill the responsibilities owed to the client. (c) are governed by a professional Code of Ethics. (d) possess exhaustive knowledge of all financial matte₹ A) (a), (b) B) (a), (b), (c) C) (a), (c), (d) D) All of the above 33. You as a CERTIFIED FINANCIAL PLANNERCM Professional are required to exercise objectivity in providing services to Mr. X, your client. This means you shall be _____________. A) Impartial B) Honest C) Competent D) Diligent 34. Recently in an unfortunate event, one of Mr. X’s brothers died in a road accident. He was a bachelor and he died intestate. Mr. X’s parents were living with his deceased brother. Apart from Mr. X there are three other siblings of the deceased. Mr. X wants to know the applicable order of priority as per Hindu Succession Act for the disposition of his deceased brother’s property. Page # 164

A) Both parents will get the priority over all siblings of Mr. X including Mr. X himself. B) All siblings of Mr. X will get the priority over their parents. C) Mr. X’s mother will get priority over D) All of them will have equal right over the property of the deceased. 35. You have advised Mr. X to purchase householders Insurance Policy to insure his house as well as contents of his house. Mr. X discusses with you about the features of Householders Insurance Policy. As per you, which of the following is not a feature of Householders Insurance policy? A) Loss or damage by the insured’s domestic staff’s direct or indirect involvement in an attempted burglary is covered. B) He can make an endorsement to the policy during the currency of the policy to record alteration related to change of Insurable interest by way of sale or mortgage. C) Insured can cancel the policy during the currency of policy and get refund of premium paid (after adjustment of administrative and other exp.) on pro-rata basis. D) The Building is insured as per the re-instatement value and the contents are insured as per the market value. 36. Mr. X wants to know, what would happen to the No Claim Bonus on his car insurance after he sells his car. A) He can enjoy the No Claim Bonus on the premium for his new car if he buys it within a specified period from the date of sale of his old car B) No Claim Bonus is lost after sale of old car C) He can enjoy only 50% benefit of the No Claim Bonus on the premium for his new car if he buys it within a specified period from the date of sale of his old car D) He can avail benefit of No Claim Bonus on premium paid for Insurance taken for other purposes from same Insurer 37. You have mentioned to Mr. X that you shall ensure all information and relevant documents given to or gathered by you are securely stored to establish at any time that it has complied with the FPSB India’s Professional Standards and be available for inspection by the FPSB India when required. Such records shall be retained for seven years from the date the document was last acted upon. This is according to the Code of Ethics of __________. A) Compliance B) Professionalism C) Diligence D) Objectivity 38. At the earliest point in the relationship, you have disclosed in writing to Mr. X that you are authorized to sell or advise on a restricted range of products, and any other limitation of their capacity to serve him. You have complied with the Code of Ethics of _________. A) Compliance B) Objectivity C) Diligence D) Competence Page # 165

39. M₹ X wants partition in Mr. X’s HUF, to claim her share and Mr. X’s share out of the HUF’s assets. In principle, Mr. X wants to know whether M₹ X can legally demand partition of Mr. X’s HUF as she is also one of the members in the same. A) Yes, as Mr. X has no objection B) No C) Yes, With prior permission from IT Department only D) Yes, after the death of Mr. X 40. A Mutual Fund agent has told Mr. X that bigger the AUM of the fund the better it is. Which of the following statements are correct? 1) The bigger the fund’s AUM, the lower the expense ratios and in that sense it could be better. 2) The bigger the fund’s AUM, less are the chances of showing break-out returns as stock buying becomes difficult without moving the price upwards. 3) The bigger the fund’s AUM the worse-off a mid & small cap fund would be, due to its limited pool of stocks. 4) The smaller the AUM of a small cap fund the better it is due to lower expenses & higher returns. B) Only 1 is correct C) Only 1 & 2 are correct D) Only 1, 2 & 3 are correct E) Only 2, 3 & 4 are correct 41. What is the correct sequence to perform six steps of Financial Planning Process to prepare a financial plan for the client? (a) Developing and Presenting the Financial plan (b) Analyzing and evaluating the client’s financial status (c) Implementing the Financial Plan (d) Monitoring the Financial Plan (e) Gather client data and determining Goals and Expectations (f) Establishing Client – Planner Relationships A) 1, 3, 4, 5, 2, 6 B) 6, 2, 5, 4, 3, 1 C) 6, 5, 2, 1, 3, 4 D) 5, 6, 2, 1, 3, 4 42. Mr. X has received few gifts in the financial year 2008-09 and he wants to know about the taxation of the same. He received a gift of ₹ 63,000 from a friend and another gift of ₹ 24,000 from his neighbor. He wants to know, what is the total taxable amount from the above receipts on which Mr. X will have to pay tax. A) ₹ 63,000, as any amount received in excess of ₹ 50,000 is taxable. B) ₹ 13,000, as the amount received over the limit of ₹ 50,000 is taxable. C) ₹ 37,000, as the total amount in excess of the limit ₹ 50,000 is taxable. D) The whole amount of ₹ 87,000, as the aggregate value of gifts received from one person or more than one person exceeds ₹ 50,000. Page # 166

43. Mr. X before approaching you has also contacted another CFPCM Practitioner for the preparation of his Financial Plan. In his first meeting with the practitioner, Mr. X asked him the sources of compensation available to the practitioner by making a Financial Plan for him other than fee. But the practitioner refused to answer this question by saying that this is out of the scope of engagement. According to FPSB India’s code of ethics, the practitioner has violated Code of Ethic of _________. A) Objectivity B) Professionalism C) Fairness D) Integrity 44. Mr. X’s mother wants to stay with Mr. X & M₹ X on a permanent basis. Before that, she wants to settle her estate. She has decided to give her Pune house to Mr. X. The current market value of this house is ₹ 25 lakh. Since Mr. X is permanently settled in Ahmedabad and has no intention of returning to Pune, he wants to dispose of the house at current market value. From tax planning perspective, what would be the right course of action for Mr. X for transaction relating to this house property? A) Mr. X’s mother should sell this house first and then gift the sale proceed to him. B) Mr. X’s mother should gift this house to Mr. X first and then he should sell the house. C) Mr. X’s mother should make a Will Deed in favour of Mr. X first and then he should sell the house. D) Mr. X’s mother should gift this house in the name of Mr. X and M₹ X equally and then they should sell the house. 45. You have ascertained that Mr. X needs a life insurance of at least ₹ 50 lakh on top priority. At his age, a term insurance plan for a 10-year term is available for annual premium of ₹ 10,000 and for a term of 15 years the same is available for an annual premium of ₹ 12,000. He is, however, concerned of getting ‘nil’ survival benefits in case of term insurance policies, though he can currently ill afford a high premium for endowment or ‘with profit’ type of policies. A ‘return of premium’ term policy for a term of 10 years for ₹ 20 Lakh sum assured would annually cost ₹ 18,000 for his profile. He wants to know which among the following would be the most appropriate policy for him in the current circumstances. A) He should take the term plan for 15 years, which will take care of his liabilities during this period in case he dies prematurely. B) He should take the term plan for 10 years only as the premium outflow here is the least. C) He should take the ‘return of premium’ policy which would yield ₹ 2 Lakh to provide for his liabilities when he is around 55 years of age. D) He should take 10-year term policy along with a 10-year ‘return of premium’ policy to the extent of ₹ 10 lakh to optimize on premium payment while getting survival benefits. 46. Which of the following shall you avoid while providing Financial Planning services to Mr. X and M ₹ X in line with the Ethical and Professional Conduct of CFPCM Certificant entailed by FPSB India? A) Keep the client informed of developments in the field of Financial Planning. B) Advice the client in those areas in which you have competence. C) Seek council of qualified individuals for areas in which you lack adequate competence. D) Alter existing financial strategy promptly, even without confirming to client, if the change in circumstances materially impacts the client’s financial goals. Page # 167

47. Mr. X wants to make some investment in the name of her mother so that she receives a regular monthly income to meet her regular expenses. He approaches you to know which of the following asset allocations you would recommend for her who will be dependent on her investments for monthly income later on. A) Fixed Deposits: 60% Post office MIS: 30% Equities: 10% B) Fixed Deposits: 40% Post office MIS: 30% Equities: 30% C) Fixed Deposits: 20% Post office MIS: 40% Equities: 40% D) Fixed Deposits: 10% Post office MIS: 40% Equities: 50% 48. M₹ X had earlier approached a CERTIFIED FINANCIAL PLANNERCM who suggested investment in certain financial products rather than earning minimal returns in a Savings bank account. The Financial Planner recommended such investments as he would earn commission on sale of such products. Which Code of Ethics binds a CFPCM practitioner to disclose conflict of interests? A) Objectivity B) Professionalism C) Integrity D) Fairness 49. M₹ X’s father had suffered loss from house property and loss from business and profession for the previous year and has delayed in filing his return of income before the due date. Will her father be eligible to carry forward losses at the time of filing his belated return of income? (Assuming he does not have any corresponding income to set off of losses) A) Yes, can he carry forward both B) No, cannot carry forward both C) Can carry forward only loss from house property D) Can carry forward only loss from business and profession 50. M₹ X wants to know which types of insurance she should buy, considering the assets, liabilities and her future goals. In the order of importance, which insurance should she ideally purchase? (a) Life Insurance (b) Health Insurance (c) Disability Insurance (d) Property Insurance B) 3, 1, 2, 4 C) 1, 3, 2, 4 D) 4, 3, 1, 2 E) 3, 2, 1, 4 51. M₹ X wants to buy her residential house today at a hill station as she has received a fabulous offer for a home loan. According to you, which types of insurance she should buy to cover that risk. A) Life Insurance and disability Insurance B) Disability Insurance and Accidental Insurance C) Householder’s Policy and Home loan Protection plan D) Health Insurance and Life Insurance Page # 168

52. Mr. X wants to invest in a new ULIP, but he wants to be cautious before entering a long period of contract. As Per IRDA (ULIP) Guidelines, if he wants to return the policy within 15 days free look period what amount would be refunded to him? A) He shall be refunded the fund value subject to deduction of expenses towards medical examination, stamp duty and proportionate risk premium for the period of cover. B) Full Premium paid is returned back to him. C) Premium paid less commission paid to intermediary is refunded to him. D) He shall be refunded the fund value. 53. While entering into a relationship with you, Mr. X assumed that you being a CERTIFIED FINANCIAL PLANNERCM practitioner, you are fully able to take care of the execution of all aspects of his Financial Plan, i.e. Taxation, Insurance, Investments, etc. As per FPSB India Code of Ethics, what is the best proposition in this context? A) This is the right assumption which can be made about all CERTIFIED FINANCIAL PLANNERCM professionals. B) The scope and limitations of the services of the CERTIFIED FINANCIAL PLANNERCM practitioner needs to be disclosed in the beginning, specifically in writing, by the professional to the client. C) A CERTIFIED FINANCIAL PLANNERCM practitioner can never take care of all aspects of a Financial Plan. D) A CERTIFIED FINANCIAL PLANNERCM practitioner is concerned with only making a Financial Plan and not its execution. 54. Mr. X has informed you that his Post Office MIS account is maturing next month. He wants to know whether this account can be extended further and, if so, for what duration? A) Cannot be extended. B) Can be extended for 24 months. C) Can be extended for 60 months. D) Can be extended for 72 months. 55. M₹ X told you that her ex-husband had purchased a life insurance policy under the MWP Act, 1874 prior to their divorce. The beneficiaries of the policy are M₹ X and their two children. M₹ X wants to know the significance and the benefits of this policy. 1) No alterations can be made by the husband once the policy is commenced 2) The proceeds of such a policy cannot be claimed by the husband or his creditors or form part of the husband’s estate 3) Alterations can be made by the wife once the policy is effected 4) The life assured is the wife A. 1, 2, 4 B. 1, 2 C. 2 D. 1, 4 56. M₹ X wants to know the importance of waiver of premium rider? You tell her that _______. (2) A) It is useless as there will not be any amount to be received from the Insurance Company at the time of maturity of the policy Page # 169

B) It is very useful as all future premiums would be waived by the Insurance Company in case the Life Assured becomes totally and permanently disabled C) It is same as Permanent Disablement rider hence need not be mentioned separately D) It is inbuilt with all the Term Insurance plans and thus need not be mentioned separately 57. M₹ X had earlier received calls from certain institutions offering free services of Financial Planning through their Financial Planners by subscribing to their financial products and services. She asks you the features of CERTIFIED FINANCIAL PLANNERCM practitioner that distinguishes you from other financial planne₹ You tell her that__________ (I) CFPCM practitioner has to go through an internationally accepted curriculum framework and meet the given competency profile (II) A CFPCM practitioner, once certified can follow any institution’s guidelines of Financial Planning without any recourse to FPSB India (III) CFPCM practitioner has to meet stringent initial certification standards and continuing education to remain certified (IV) CFPCM practitioner has to abide by FPSB India’s Code of Ethics and professional guidelines (V) A CFPCM Certificant has to necessarily do a fee-based Financial Planning Which of the above are correct? (2) A) (II) and (V) only B) (I), (III) and (IV) only C) (I) and (II) only D) (I) and (IV) only 58. M₹ X wants to create a private trust in the name of her children. According to you, which of the following are true in case of a private trust (I) A trustee shall be any known person capable of holding property (II) A trust has to be declared by a non – testamentary instrument in writing , signed and registered or by the will of the author of the trust or of the trustee in case of an immovable property (III) A trustee would be taxed in his hands in a representative capacity where the beneficiary is a minor, lunatic or idiot or specifically entitled to receive the income from the trust (IV) The author of the trust can be the trustee himself B) (III) and (IV) C) (II) and (III) D) (II), (III) and (IV) E) (I), (II) and (IV) 59. Before beginning work on Mr. X’s Financial Plan, you have drafted a “Letter of Engagement” and sought Mr. X’s consent on the same. Mr. X asked you about relevance of such a letter. In the context of Financial Planning profession, you explain about the “Letter of Engagement” as a _________. (2) A) professional requirement under Code of Ethics of FPSB India B) professional requirement under Practice Guidelines of FPSB India C) necessary legal requirement as per Contract Act 1872 D) document for his personal record Page # 170

60. Mr. X, who is a Hindu, wants to know according to which Act his father’s estate would be distributed in case he dies Intestate. (2) A) Hindu Succession Act, 1956 B) Indian Contract Act C) Indian Succession Act, 1925 D) Transfer of Property Act 61. Mr. X wants to know what the most appropriate instrument is/are to replicate exactly the equity market returns over a sufficiently long period with the least cost and risks. 1) Diversified Growth schemes of Mutual Funds 2) Equity Index Funds 3) Growth Option of ULIPs 4) Exchange Traded Funds of Equity Indices 5) A portfolio of Large Capitalized stocks A) (i) and (ii) B) (ii) and (iv) C) (i) and (iii) D) (iv) and (v) 62. Mr. X saw the acronym CFPCM against your name in your business card. He wants to know about the same. You tell him that ________. A) CFP marks are owned outside the US by US based FPSB Ltd B) FPSB India is the owner of CFP marks within Indian territory C) The US based FPSB Ltd. is licensed globally to administer CFP marks D) The US based FPSB Ltd. and FPSB India are respectively licensed to issue CFP certification in US and India 63. Mr. X wants to make a Will and understand its procedures; you explained that the ________ is the person responsible for offering the Will for probate. (2) A) Testator B) Executor C) Lawyer D) Beneficiary 64. Which of the following shall you avoid while providing Financial Planning services to M₹ X in line with the Ethical and Professional Conduct required of CFPCM professionals by FPSB India? A) Alter existing financial strategy promptly in the interest of M₹ X, even without confirming to her, if the adverse developments materially impact her financial goals. B) Keep M₹ X fully informed of adverse developments affecting her financial goals and take remedial action only after her understanding of the situation and her concurrence. C) Advise M₹ X of the developments affecting her financial goals only when she comes for review of Financial Plan after the pre-determined period. D) Revise asset allocation as often as possible to ensure that the financial goals are achieved exactly as set out initially. Page # 171

65. As per the practice guidelines of FPSB India followed by you, being a CERTIFIED FINANCIAL PLANNERCM practitioner, which amongst the following is the next step after defining and discussing with M₹ X the basic terms of the financial plan construction? A) To collect the general quantitative information of the prospective client B) To inform the prospective client about the terms of the engagement C) To define the financial goal of M₹ X D) To share past financial records of your existing clients with your prospective client in order to make him comfortable with number and success of your clientele funds 66. M₹ X has not bought personal accident insurance cover, though her car is covered for damages from accident. She wears seat belt and drives carefully. You, as a CFPCM professional, had your following observation about her risk management? A) M₹ X has insured the property risk; she controls some of her personal risk and retains the rest of the risk. B) M₹ X has transferred her personal risk to other drivers of the road, insured her property risk and can claim damage if accidents are caused by third party negligence. C) M₹ X has controlled her personal risk and insured her property risk. D) M₹ X has not done anything to manage her risks and has to immediately go for accident and personal risk cover. She cannot rely on third party damages alone to cover the risk of the road. 67. M₹ X wants to know, which are the documents her claimant (nominee/legal heir) must send to insurance company to claim the policy benefits in case of a life insurance policy? 1) An intimation of the death of the life assured to the insurance company 2) Death certificate from local authorities 3) Completed claim forms and other forms as required by the company 4) Valid Policy of Life assurance 5) Authentic Identification that the person claiming is entitled to receive the payment B) (i), (ii), (iii), (iv) & (v) C) (ii), (iii) & (iv) D) (i), (iii) & (iv) E) (ii), (iii), (iv) & (v) 68. M₹ X wants to know if she were to meet with an accident and get permanent disability in the third year of her Term Insurance policy, what amount of the premium due in the fourth year would be payable by her. The premium being paid towards the policy is ₹ 15,000 with sum assured of ₹ 50 Lakh. A) ₹ 15,000 B) ₹ 12,000 C) ₹ 7,500 D) Nil 69. You have advised M₹ X to do Estate Planning. According to you what should be the most preferred way for her Estate Planning? A) She should prepare a Will naming her children as the sole beneficiaries as well as designate one or more guardians with their prior consent. B) She should devolve all of her personal properties to her personal HUF. Page # 172

C) She should prepare a Will naming her children as the sole beneficiaries in the same. D) She should transfer all of her existing properties in the names of her children and nominate her both children equally in all her legal documents. 70. In the initial stage of Financial Plan preparation, you told Mr. X and also mentioned in the Engagement Letter that you would charge fixed fee for the Financial Plan construction and you would also earn commission on sale of recommended financial products, if the same is accepted. Which code of ethics binds the CFPCM Practitioner to disclose conflict of interests? A) Objectivity B) Fairness C) Integrity D) Professionalism 71. Mr. X wants to buy a life insurance policy on the life of his father as well as both his brothe₹ However, in case of any eventuality he wants to reserve all legal rights of receiving the policy benefits in his name. He wants to know whether it is legally possible for him. A) Yes, he can buy the policy in the desired way. B) Yes, but he cannot reserve the right to receive the policy benefits. C) No, in the absence of insurable interest he cannot buy life insurance policy in their name. D) He can buy the policy only in the name of his father in the desired way 72. Mr. X’s father has made a Will deed for distribution of his assets. Mr. X discusses with you regarding Probate process, as per you which is not a feature of Probate process? A) The assets are gathered, applied to pay debts, taxes and expenses of administration and distribute to those designated as beneficiaries in the Will. B) Executor or Personal Representative named in the Will is in charge of this process. C) All legal heirs will receive notices from the court to file objections. D) The court will give orders to distribute the assets to the heirs as per intestate succession Act. 73. You have disclosed in writing to Mr. X on your ability to advise and sell on a restricted range of products, and some other limitation of their capacity to serve him. You have complied with the Code of Ethics of _____________. A) Integrity B) Objectivity C) Fairness D) Diligence 74. You have already mentioned to Mr. X that you shall confirm in writing to him where a subsequent instruction given by him significantly alters the financial strategy or balance of an existing portfolio under your supervision. You have complied with the Code of Ethics of __________. A) Diligence B) Compliance C) Confidentiality D) Objectivity Page # 173

75. Mr. X wants to know, what are the factors that are included in the calculation of life insurance premium rate? (a) Rate of Mortality (b) Investment earnings (c) Expenses (d) Economic condition of the country (e) Political stability A) 1, 2, 3, and 4 B) 1, 2 and 3 C) 1 and 2 D) 1, 2, 3, 4 and 5 76. Which of the following are the accepted ways globally for professionals certified by the Affiliates of FPSB Ltd. worldwide to write the certification mark against their name? (a) Certified Financial Planner (b) CFP (c) C.F.P. (d) CERTIFIED FINANCIAL PLANNER (e) C F P A) 1, 2 and 3 B) 1 and 5 C) 2 and 4 D) 1 and 3 77. Which of the following usages of the certification mark owned (outside the U.S.) by FPSB Ltd. Are correct? (a) CFP Qualification (b) CFP Certification (c) CFP Education (d) CFP Professional (e) CFP Practitioner 78. Mr. X wants to know that in case he dies intestate, who among his following relatives would not get preference while his property is being devolved. A) daughter B) dad C) wife D) mother 79. You have selected a Mutual Fund scheme which has stocks in its portfolio which move together and have a high correlation. A) The Mutual Fund portfolio will have a return that is lower than the stocks included in it, but have a risk that is higher than the risk of the stocks. B) The Mutual Fund portfolio will have a return that is the average of the stocks included in it, but have a risk that is lower than the risk of the stocks. Page # 174

C) The Mutual Fund portfolio will have a return that is the average of the stocks included in it, but have a risk that is higher than the risk of the stocks. D) The Mutual Fund portfolio will have a return and risk, which lies in the range of risk and return of the stocks included in it. 80. The estimated value of a real estate asset in a financial statement of Mr. X, prepared by you would be based upon the: (2) A) Basis of the asset, after taking into account all straight line and accelerated depreciation. B) Mr. X's estimate of current value. C) Current replacement value of the asset. D) Value that a well informed buyer is willing to accept from a well informed seller where neither is compelled to buy or sell 81. Mr. X has asked you to give him a written assurance that if you prepare a Financial Plan for him, then in no case you would reveal any of his information to any other person, including his family membe₹ As per FPSB Code of Ethics, is it possible for you? (3) A) Yes B) No C) Yes, but with prior consent of all relevant family membe₹ D) No, because client has no authority to demand such type of assurance. 82. After working on the restructuring of the existing portfolio of Mr. X, you have recommended for a major shift into equities and he has acted upon your advice implicitly. Unfortunately in the current year, equities performed badly and Mr. X’s portfolio lost almost 50% of the original investment. If he blames you for the same, then on what ground you may seek relief? (2) A) Volenti non fit injuria (to a willing person one cannot do injustice) B) Caveat emptor (let the buyer beware) C) Cuiusvis hominis est errare (every human can make a mistake) D) Ignorantia legis non excusat (ignorance of the law is no excuse) 83. Mr. X wants to know what maximum amount can be claimed with respect to each covered family member in the proposed health insurance policy (Family Floater) of Virendra’s family. (2) A) Each family member can claim upto one third amount of total sum assured. B) Both the parents can claim upto 40% each of the sum assured while the child can claim 20% of the sum assured. C) No limit is defined for individual family member subject to overall sum assured. D) None of the above 84. Mr. X is seriously concerned with the ongoing rising inflation. Taking a bitter experience of his earlier equity investments, he is keen to do some investments in debt instruments. Keeping in view the constantly rising inflation rate into account, which type of investment, from the given options, is advisable for Mr. X in the current scenario? (2) A) Bank FDR B) Long Term Bonds C) Short Term Bonds D) Floating Rate Bonds 85. Mr. X has not done any Estate Planning as of now. Even his father has not prepared any Estate Planning documents. As Mr. X is the only son of his parents, along with his 3 sisters, what is most Page # 175

suitable for him? (2) A) Mr. X's father should first prepare his Will and on the basis of that Will Mr. X should prepare his own Will. B) Mr. X should create his own Will without waiting for his father’s Will. C) There is no need for any Estate Planning as the family is a joint family & Mr. X is the only son of his parents. D) Mr. X should create his Will by including his father’s property but with an inbuilt provision for his sisters on account of that property. 86. Mr. X informed you that prior to consultations with you, he had contacted another CFPCM practitioner who demanded a flat remuneration of 35% of the “Assets under Management” from Mr. X for providing his services. Is there any violation of “Code of Ethics” as stipulated by FPSB India by the earlier Practioner? A) This is a matter of mutual consent between the practitioner and the client only. B) This is a violation of Code of Ethics of Professionalism. C) This is a violation of Code of Ethics of Fairness. D) This is a violation of Code of Ethics of Compliance. 87. Mr. X’s parents are senior citizens. They have no other source of income other than what they get from Mr. X per month. Mr. X wants to ensure a separate source of cash inflow for them thereby ending their dependency upon him. For this purpose he wants to deposit ₹ 5 lakh each in the name of both of his parents in Senior Citizen Saving Scheme, 2004. However before doing so he wants to know from you whether the same is allowed. (2) A) No, any deposit in the said scheme should be made only from the retirement benefits of the concerned depositor. B) Yes, after the age of 60 years of depositor, source of deposit is immaterial. C) No, any deposit in the said scheme should be sourced from self-funds only. D) Yes, any person not having any source of income can make a deposit in the said scheme. 88. Mr. X is seeking your advice regarding suitability of a health insurance plan for his family. Taking into account the health status of the family, what would be your advice? (3) A) The family has good liquidity to take care of any sudden medical expenses, hence no health insurance policy is required. B) Given fairly good medical history, they should postpone taking health insurance for 5 more yea₹ C) A floater policy which covers the medical expenses of any member of the family, as well as disability insurance of Mr. X, at least, must be taken. D) Mr. X can save upto ₹ 15,000 under section 80 D by taking a suitable health cover to that extent. 89. You have suggested an investment strategy which aims to invest more when the share price or NAV falls and less when the share price or NAV rises. It is done by achieving the total targeted value of the investment by making appropriated amounts at each predetermined interval. You are indicating a technique known as _________. A) Value Averaging B) Rupee Cost Averaging C) Economic Cost Averaging Page # 176

D) Weighted Averaging 90. Which of the following shall you avoid while providing Financial Planning services to M₹ X in line with the Ethical and Professional Conduct required of CFPCM professionals by FPSB India? A) Alter existing financial strategy promptly in the interest of M₹ X, even without confirming to her, if the adverse developments materially impact her financial goals. B) Keep M₹ X fully informed of adverse developments affecting her financial goals and take remedial action only after her understanding of the situation and her concurrence. C) Advise M₹ X of the developments affecting her financial goals only when she comes for review of Financial Plan after the pre-determined period. D) Revise asset allocation as often as possible to ensure that the financial goals are achieved exactly as set out initially. 91. As per the practice guidelines of FPSB India followed by you, being a CERTIFIED FINANCIAL PLANNERCM practitioner, which amongst the following is the next step after defining and discussing with M₹ X the basic terms of the financial plan construction? A) To collect the general quantitative information of the prospective client B) To inform the prospective client about the terms of the engagement C) To define the financial goal of M₹ X D) To share past financial records of your existing clients with your prospective client in order to make him comfortable with number and success of your clientele funds 92. M₹ X has not bought personal accident insurance cover, though her car is covered for damages from accident. She wears seat belt and drives carefully. You, as a CFPCM professional, had your following observation about her risk management? A) M₹ X has insured the property risk; she controls some of her personal risk and retains the rest of the risk. B) M₹ X has transferred her personal risk to other drivers of the road, insured her property risk and can claim damage if accidents are caused by third party negligence. C) M₹ X has controlled her personal risk and insured her property risk. D) M₹ X has not done anything to manage her risks and has to immediately go for accident and personal risk cover. She cannot rely on third party damages alone to cover the risk of the road 93. M₹ X wants to know, which are the documents her claimant (nominee/legal heir) must send to insurance company to claim the policy benefits in case of a life insurance policy? 1) An intimation of the death of the life assured to the insurance company 2) Death certificate from local authorities 3) Completed claim forms and other forms as required by the company 4) Valid Policy of Life assurance 5) Authentic Identification that the person claiming is entitled to receive the payment A) (i), (ii), (iii), (iv) & (v) B) (ii), (iii) & (iv) C) (i), (iii) & (iv) D) (ii), (iii), (iv) & (v) Page # 177

94. M₹ X wants to know if she were to meet with an accident and get permanent disability in the third year of her Term Insurance policy, what amount of the premium due in the fourth year would be payable by her. The premium being paid towards the policy is ₹ 15,000 with sum assured of ₹ 50 Lakh. A) ₹ 15,000 B) ₹ 12,000 C) ₹ 7,500 D) Nil 95. You have advised M₹ X to do Estate Planning. According to you what should be the most preferred way for her Estate Planning? A) She should prepare a Will naming her children as the sole beneficiaries as well as designate one or more guardians with their prior consent. B) She should devolve all of her personal properties to her personal HUF. C) She should prepare a Will naming her children as the sole beneficiaries in the same. D) She should transfer all of her existing properties in the names of her children and nominate her both children equally in all her legal documents. 96. Mr. X has told you that one of his friends was consulting a financial advisor who moved a major chunk of his friend’s investments into equities when markets were at their peak resulting in loss of a major portion of that investment. His friend is very upset with that as he was not taken into confidence before taking this step. You convince Mr. X that you, being a CFPCM Certificant, are bound by Code of Ethics of Diligence. Which of the following is not a feature of the said Code? While preparing oral and written recommendations, a member of FPSB India shall _________. A) conduct or have access to research on financial strategies and products that may be appropriate to achieve the client’s identified needs and objectives B) develop a suitable financial strategy or plan for the client based on the relevant information collected and analyzed C) take reasonable steps to place the client in a position to comprehend the recommendations and the basis thereof D) build within the recommendations suitable ‘stop loss’ situations to avoid losses of high magnitude 97. Mr. X wants to buy a life insurance policy on the life of his father as well as both his brother However, in case of any eventuality he wants to reserve all legal rights of receiving the policy benefits in his name. He wants to know whether it is legally possible for him. A) Yes, he can buy the policy in the desired way. B) Yes, but he cannot reserve the right to receive the policy benefits. C) No, in the absence of insurable interest he cannot buy life insurance policy in their name. D) He can buy the policy only in the name of his father in the desired way. 98. Mr. X’s father-in-law is a well-established businessman and M₹ X is their only child. He wants to include Mr. X as a member in their HUF. Is it possible? A) Yes B) No C) Yes, but with prior permission from IT department Page # 178

D) Yes, but first Mr. X’s father-in-law should prepare a non-revocable Will in favour of Mr. X 99. Mr. X wants to know from you, what is the status of his nomination in financial assets of his M₹ X as she has died intestate? A) Nomination shows that Mr. X will get the full custody and the sole ownership as well of the financial assets. B) Nominee has only the right to receive the proceeds of financial assets; the distribution of such assets to legal heirs may take place later as per Succession law. C) Nominee’s role in nomination is equivalent to the role of executor applied in case of Will. D) Nomination gives right of share of ownership even to person who has no blood relation with deceased. 100. Mr. X wants to know, the advantage from tax angle by investing in an Equity Mutual Fund scheme vis-a vis direct investment in equity shares? A) Mutual Fund scheme pay tax-free dividend, while dividends paid directly by companies are taxable B) Mutual Fund schemes are not subject to short-term Capital Gains tax on sale of shares, such gains may be passed on to investors in the form of tax free dividends C) Equity Mutual Fund schemes do not pay dividend distribution tax, while dividend payments from companies are subject to distribution tax D) Mutual fund redemptions are exempt from capital gains tax 101. You have found that all the stocks in M₹ X’s portfolio move together and have a high correlation. How will that impact the risk and return of the portfolio? A) The portfolio will have a return that is the average of the stocks included in it, but have a risk that is lower than the risk of the stocks. B) The portfolio will have a return that is the average of the stocks included in it, but have a risk that is higher than the risk of the stocks. C) The portfolio will have a return and risk, which lies in the range of risk and return of the stocks included in it. D) The portfolio will have a return that is lower than the stocks included in it, but have a risk that is higher than the risk of the stocks. 102. M₹ X held her portfolio for 10 year How will you compute her return over the period in annual terms? A) The holding period return is computed by comparing the total appreciation in the portfolio and the dividends received, with the original amount invested. The number can then be annualized. B) The CAGR of the portfolio, including the dividends received, represents the return on the investment. C) The holding period return will be equal to the dividend yield over the holding period. D) Annual return for every year has to be first computed. This has to then be averaged to know the returns over the 10 year period. 103. An analyst has advised Mr. X after considering him to be risk averse, to invest in a portfolio to optimize or maximize expected return based on a given level of market risk, emphasizing that risk is an inherent part of higher reward. He was referring to ____________. Page # 179

A) Sharpe Ratio B) Post-Modern Portfolio Theory C) Jensen’s Ratio D) Modern Portfolio Theory 104. You tell Mr. X that the primary objective of Financial Planning is to manage one’s cash flows optimally to achieve one’s financial goals. Which one of the following best describes the management of liquidity? It is to manage cash in order to ___________. A) minimise the cash balances to optimise interest earnings B) arrive at optimal cash balance based on a well-drawn budget C) maintain enough cash to meet all liquidity requirements D) strike a balance between liquidity needs and interest foregone on cash balances 105. Mr. X wants to know the logic behind calculation of risk premium for Life Insurance of a person his age, given that in a population of 1,000 persons aged 46 years and are healthy. It is expected 6 persons die during the year. If the economic value of the loss suffered by each family of the dying person is ₹ 5,00,000, calculate the pure risk premium for each person per thousand sum assured. A) ₹ 60 B) ₹ 300 C) ₹ 30 D) ₹ 6 106. You have asked Mr. X to prepare an estimation of the revenue and expenses over a specified future period of time. You are referring him to prepare a/an _________. A) Income and Expenditure Statement B) Balance Sheet C) Budget D) Cash Flow statement 107. You have mentioned to Mr. X that you shall ensure all information and relevant documents given to or gathered by you are securely stored to establish at any time that it has complied with the FPSB India’s Professional Standards and be available for inspection by the FPSB India when required. Such records shall be retained for seven years from the date the document was last acted upon. This is according to the Code of Ethics of __________. A) Compliance B) Professionalism C) Diligence D) Objectivity 108. At the earliest point in the relationship, you have disclosed in writing to Mr. X that you are authorized to sell or advise on a restricted range of products, and any other limitation of their capacity to serve him. You have complied with the Code of Ethics of _________. A) Compliance B) Objectivity C) Diligence D) Competence Page # 180

109. M₹ X wants partition in Mr. X’s HUF, to claim her share and Mr. X’s share out of the HUF’s assets. In principle, Mr. X wants to know whether M₹ X can legally demand partition of Mr. X’s HUF as she is also one of the members in the same. A) Yes, as Mr. X has no objection B) No C) Yes, With prior permission from IT Department only D) Yes, after the death of Mr. X 110. A Mutual Fund agent has told Mr. X that bigger the AUM of the fund the better it is. Which of the following statements are correct? 1) The bigger the fund’s AUM, the lower the expense ratios and in that sense it could be better. 2) The bigger the fund’s AUM, less are the chances of showing break-out returns as stock buying becomes difficult without moving the price upwards. 3) The bigger the fund’s AUM the worse-off a mid & small cap fund would be, due to its limited pool of stocks. 4) The smaller the AUM of a small cap fund the better it is due to lower expenses & higher returns. A) Only 1 is correct B) Only 1 & 2 are correct C) Only 1, 2 & 3 are correct D) Only 2, 3 & 4 are correct 111. What is the correct sequence to perform six steps of Financial Planning Process to prepare a financial plan for the client? 1. Developing and Presenting the Financial plan 2. Analyzing and evaluating the client’s financial status 3. Implementing the Financial Plan 4. Monitoring the Financial Plan 5. Gather client data and determining Goals and Expectations 6. Establishing Client – Planner Relationships A) 1, 3, 4, 5, 2, 6 B) 6, 2, 5, 4, 3, 1 C) 6, 5, 2, 1, 3, 4 D) 5, 6, 2, 1, 3, 4 112. Mr. X before approaching you has also contacted another CFPCM Practitioner for the preparation of his Financial Plan. In his first meeting with the practitioner, Mr. X asked him the sources of compensation available to the practitioner by making a Financial Plan for him other than fee. But the practitioner refused to answer this question by saying that this is out of the scope of engagement. According to FPSB India’s code of ethics, the practitioner has violated Code of Ethic of _________. A) Objectivity B) Professionalism C) Fairness D) Integrity Page # 181

113. Mr. X’s mother wants to stay with Mr. X & M₹ X on a permanent basis. Before that, she wants to settle her estate. She has decided to give her Pune house to Mr. X. The current market value of this house is ₹ 25 lakh. Since Mr. X is permanently settled in Ahmedabad and has no intention of returning to Pune, he wants to dispose of the house at current market value. From tax planning perspective, what would be the right course of action for Mr. X for transaction relating to this house property? A) Mr. X’s mother should sell this house first and then gift the sale proceed to him. B) Mr. X’s mother should gift this house to Mr. X first and then he should sell the house. C) Mr. X’s mother should make a Will Deed in favour of Mr. X first and then he should sell the house. D) Mr. X’s mother should gift this house in the name of Mr. X and M₹ X equally and then they should sell the house. 114. Which of the following shall you avoid while providing Financial Planning services to Mr. X and M ₹ X in line with the Ethical and Professional Conduct of CFPCM Certificant entailed by FPSB India? A) Keep the client informed of developments in the field of Financial Planning. B) Advice the client in those areas in which you have competence. C) Seek council of qualified individuals for areas in which you lack adequate competence. D) Alter existing financial strategy promptly, even without confirming to client, if the change in circumstances materially impacts the client’s financial goals. 115. Mr. X wants to make some investment in the name of her mother so that she receives a regular monthly income to meet her regular expenses. He approaches you to know which of the following asset allocations you would recommend for her who will be dependent on her investments for monthly income later on. A) Fixed Deposits: 60% Post office MIS: 30% Equities: 10% B) Fixed Deposits: 40% Post office MIS: 30% Equities: 30% C) Fixed Deposits: 20% Post office MIS: 40% Equities: 40% D) Fixed Deposits: 10% Post office MIS: 40% Equities: 50% 116. You, as a CFPCM Certificant, need to disclose regarding compensation to be received from Mr. X. According to you, which would be the most appropriate option? A) Need not disclose the source of compensation B) Need to disclose compensation structure at the time of establishing relationship C) Need to disclose only when asked by Mr. X D) Need to disclose the source once the financial plan is constructed 117. You have disclosed in writing to Mr. X that you are only authorized to sell or advise on a restricted range of products, and other limitation of your capacity to serve him, this is according to the Rules that relate to the Code of Ethic of _____________. A) Objectivity B) Competence C) Fairness D) Integrity Page # 182

118. During the financial discussions with Mr. X, you asked him about his income. But Mr. X was bit of hesitant in telling his income details to you. Mr. X wants to know the relevance of income in analyzing his insurance requirement. You explained him that his income would be used to determine: I. The amount of income protection cover required II. The amount of premium loading and/or any exclusion applicable to the policy III. What level of income would be required for dependants in the event of premature death? IV. What level of income would be required in the event of disability? B) I and II C) II and IV D) I, III and IV E) I, II and IV 119. You as a CFPCM Certificant have made it clear to Mr. X that you shall enter into an engagement with him as a client only after securing sufficient information to be satisfied that: a) The relationship is warranted by Mr. X’s needs and objectives; and b) You have the ability to either provide requisite competent services or to involve other professionals who can provide such services. You have followed the Code of Ethic of __________. A) Diligence B) Professionalism C) Compliance D) Fairness 120. During the recent period you feel that the stock market has shown a strong bullish run. The Super Industry Ltd’s Shares, which Mr. X bought for ₹ 900 per share about nine months back, are now at ₹ 1,760 per share. He does not want to sell his shares since he is bullish in the long term. He wants to protect the appreciation on the stock price from the downside which market may face in the short term. He approaches you to guide him what strategy he should use. CALL Option of ₹ 1,740 is available @₹ 60, PUT Option of 1740 is available @ ₹ 50. A) Buy PUT option B) Sell PUT Option C) Buy CALL Option D) Sell CALL Option 121. Mr. X has come to know about this CFPCM practitioner through a newspaper advertisement. The theme and wording of advertisement says that along with preparation of Financial Plan, they also help to generate assured return of 12% p.a. According to FPSB India’s code of ethics, the practitioner has violated _________. A) Code of Ethic of Objectivity B) Code of Ethic of Professionalism C) Code of Ethic of Fairness D) Code of Ethic of Integrity Page # 183

122. Before finalizing the Financial Plan, Mr. X tells you that he wants to entrust the estate issues to a solicitor friend, Mr. Z. Which of the following is your best stand? A) This is not permissible as per the Rules of FPSB India B) This is permissible subject to such an arrangement finding an explicit mention in the Financial Plan for the said activity C) This is permissible subject to the advice of the solicitor being integrated into the Financial Plan and monitored along with the Plan D) You may enter into an MoU with the Solicitor and may also have a revenue sharing model 123. M₹ X wants your advice to disclose her professional Income 50% less than the actual to reduce her tax liability in the current year. You advice not to conceal particulars of her Income or furnish an inaccurate particulars of such income, as Penalty payable in addition to tax under section 271(1)c of Income Tax Act is ____________ is payable. A) at the discretion of Commissioner of Income tax B) minimum 200% of the tax sought to be evaded and maximum 300% of the tax sought to be evaded C) minimum 100% of the Income sought to be evaded and maximum 300% of the Income sought to be Evaded D) minimum 100% of the tax sought to be evaded and maximum 300% of the tax sought to be evaded 124. Being pessimistic due to the present recessionary market, M₹ X is thinking to surrender her ULIP after 4 years subscription only. She wants to know from Income Tax planning perspective whether it would be advisable for her to surrender this insurance policy at present as she keeps on claiming deduction u/s 80C against this policy’s investment? A) She should hold this policy for at least one more year B) She can surrender this policy any time after three years from the date of buying the policy C) She should hold this policy for at least six more years D) She should hold this policy for the full term 125. M₹ X wants to adopt a child and part with some of her properties in favour of the child. She wants to plan her Estate as she will remain a spinster throughout her life. But she is afraid that after her death her brother may challenge such transfer. You would advise her __________. A) not to do any Estate Planning B) to prepare a WILL C) to create a Registered Living Trust where the child would be the beneficiary D) to prepare a Power of Attorney in favour of her father to manage her property for the benefit of the Child 126. A Life Insurance Agent has approached M₹ X with two types of Term Insurance Plans: i) Plan I, without return of premium, term 25 years, Sum Assured of ₹ 25 lakh, yearly premium payable ₹ 1.94 per thousand of SA ii) Plan II, with return of total premiums paid, on maturity, term 25 years, Sum Assured of ₹ 25 lakh, yearly premium payable ₹ 2.95 per thousand of SA. Page # 184

M₹ X is not clear which plan to opt for and she seeks yours advice on which policy is beneficial for her, if discounted by the risk free rate. (Assuming M₹ X lives till maturity of the Insurance Policy) B) Plan I is better as the net present value is higher C) Plan I is better as the net present value is lower D) Plan II is better as the net present value is higher E) Plan II is better as the net present value is lower 127. M₹ X wants to know if she dies before the vesting date of the Unit Linked Pension Plan how will it be taxed in the hands of the nominee for the amount received as per currently prevailing provisions of the Income Tax Act, assume the allocation is 100% into equity. A) Fully Taxable B) Fully Exempt C) Subject to long term capital gain of 10% without indexation benefit D) One third would be tax free 128. Mr. X’s father has taken a loan under reverse mortgage scheme against his house in Gurgaon which is valued today at ₹ 20 lakh. Mr. X is curious to know, if the loan amount being received by his father will be treated as income and whether the alienation of property for recovery of loan attracts capital gains? A) The amount received by Mr. X’s father shall be treated as his income and it will be taxable in his hands and for the purpose of alienation of property for recovery of loan shall attract capital gain. B) The amount received by Mr. X’s father shall not be treated as his income and shall be exempt from tax and for the purpose of alienation of property for recovery of loan shall not attract capital gain. C) The amount received by Mr. X’s father shall not be treated as his income hence shall not be taxed, for the purpose of alienation of property for recovery of loan shall attract capital gain. D) The amount received by Mr. X’s father shall be treated as his income and it will be taxable in his hands and for the purpose of alienation of property for recovery of loan shall attract capital gain but only in case of death of the mortgagor. 129. M₹ X wants to adopt a child and part with some of her properties in favour of the child. She wants to plan her Estate as she will remain a spinster throughout her life. But she is afraid that after her death her brother may challenge such transfer. You would advise her __________. A) not to do any Estate Planning B) to prepare a WILL C) to create a Registered Living Trust where the child would be the beneficiary D) to prepare a Power of Attorney in favour of her father to manage her property for the benefit of the Child 130. M₹ X wants to know if she dies before the vesting date of the Unit Linked Pension Plan how will it be taxed in the hands of the nominee for the amount received as per currently prevailing provisions of the Income Tax Act, assume the allocation is 100% into equity. A) Fully Taxable B) Fully Exempt Page # 185

C) Subject to long term capital gain of 10% without indexation benefit D) One third would be tax free 131. Mr. X’s father Mr. X’s father has taken a loan under reverse mortgage scheme against his house in Gurgaon which is valued today at ₹ 20 lakh. Mr. X is curious to know, if the loan amount being received by his father will be treated as income and whether the alienation of property for recovery of loan attracts capital gains? A) The amount received by Mr. X’s father shall be treated as his income and it will be taxable in his hands and for the purpose of alienation of property for recovery of loan shall attract capital gain. B) The amount received by Mr. X’s father shall not be treated as his income and shall be exempt from tax and for the purpose of alienation of property for recovery of loan shall not attract capital gain. C) The amount received by Mr. X’s father shall not be treated as his income hence shall not be taxed, for the purpose of alienation of property for recovery of loan shall attract capital gain. D) The amount received by Mr. X’s father shall be treated as his income and it will be taxable in his hands and for the purpose of alienation of property for recovery of loan shall attract capital gain but only in case of death of the mortgagor. 132. Mr. X read a draft offer document that PFRDA has come out with a New Pension Scheme (NPS) for all citizens of India. He is also thinking to invest in NPS but he is confused with regards to the withdrawal provisions of the scheme in Tier-I. You are required to provide him with the correct details of the withdrawal. i) If he exits before 60 years of age, he will have to invest at least 20% of the pension wealth to purchase a life annuity and the rest 80% of pension wealth may be withdrawn as a lump sum. ii) If he exits on attaining 60 years of age, he will have to invest at least 40% of the pension wealth to purchase a life annuity and the rest 60% of pension wealth may be withdrawn as a lump sum or in a phased manner between ages 60 and 70 yea₹ iii) If he exits before 60 years, he will have to invest at least 80% of the pension wealth to purchase a life annuity and the rest 20% of pension wealth may be withdrawn as a lump sum. iv) If he exits on attaining 60 years of age, he will have to invest at least 60% of the pension wealth to purchase a life annuity and the rest 40% of pension wealth may be withdrawn as a lump sum or in phased manner between ages 60 and 70 yea₹ A) i & iv B) i & ii C) ii & iii D) iii & iv 133. Mr. X, in a business conference met a CFPCM Practitioner who was one of his old friends. Both of them were discussing about their professions and businesses and during the talks Mr. X asked for some recommendation on his personal finances from his CFPCM friend. He suggested Mr. X to come to his office and he will provide the recommendations in writing. Mr. X asked, is it important to have it in writing? You as a CFPCM Practitioner explained that all recommendations concerning the financial affairs of a client should be presented in writing because: 1) It is regarded as best practice under the FPSB India code of ethics and rules of professional conduct. Page # 186

2) It provides substantial protection to the planner under common laws against any claims arising thereof. 3) It will not attract the law of contract to determine the civil rights of both the parties. 4) It gives the client the necessary time to fully consider the planner’s recommendations. B) 1, 2 and 4 only C) 2, 3 and 4 only D) 1 and 4 only E) 1, 2, and 3 only 134. Mr. X is planning to create a specific trust under a will and start the new business under the name of the trust. He plans to have Neha as 100% specific beneficiary of the trust for her support and maintenance. He approached you a CERTIFIED FINANCIAL PLANNERCM to take advice on creation of trust. You as a CFPCM Practitioner are required to provide him with the provisions relating to taxation of the income of the trust if the said trust is the only trust created by Mr. X in the benefit of Neha. A) The specific trust will be assessable at a flat rate of 20% plus cess plus surcharge if the income of the trust exceeds ₹ 10 lakh. B) The specific trust will be assessable at the maximum marginal rate of income tax u/s 161(1A) of the Income Tax Act. C) The specific trust will be assessable at the slab rates of income applicable to the total income of an individual and will be covered under the exception clause u/s 161(1A). D) The specific trust under Indian Trust Act cannot override the provisions of the Income Tax Act and Mr. X will be assessed under the head of Business and profession as per provisions applicable to an individual. 135. In the initial stage of Financial Plan preparation, you told Mr. X and also mentioned in the Financial Plan prepared that you would charge fixed fee for the Financial Plan construction and you would also earn commission on sale of recommended financial products, if the same is accepted. Which code of ethics binds the CFPCM Practitioner to disclose conflict of interests? A) Objectivity B) Fairness C) Integrity D) Professionalism 136. You have advised Ms. X to do Estate Planning. According to you what should be the most preferred way for her Estate Planning? A) She should devolve all of her personal properties to her personal HUF. B) She should prepare a Will naming her children as the sole beneficiaries in the same. C) She should prepare a Will naming her children as the sole beneficiaries as well as designate one or more guardians with their prior consent. D) She should transfer all of her existing properties in the names of her children and nominate her both children equally in all her legal documents. 137. Ms. X has told you that before divorce Mr. X had bought a single premium life insurance policy on his own life and expressed on the face of it to be for the benefit of his wife and children as per Section 6 of Married Women's Property Act, 1874. Now, Mr. X wants to change the beneficiary of the said policy. Page # 187

Ms. X asks you whether it is possible. A) Yes, by making an amendment in the trust deed. B) No, alteration is not permitted. C) Yes, but with written consent of Ms. X only. D) Yes, but only by writing a registered Will. 138. Ms. X wants to know how the amount of ₹ 20,000 invested by cheque in her PPF account by Mr. X from his own income in May 2008 would be treated while computing her Income Tax liability. A) ₹ 20,000 now and interest thereon will be tax free in her hands; she would not get benefit of ₹ 20,000 u/s 80C. B) ₹ 20,000 now and interest thereon will be tax free in her hands and she would also get benefit of ₹ 20,000 u/s 80C. C) ₹ 20,000 and the interest thereon would be tax free in her hands and she would get benefits u/s 80C only if she reimburses ₹ 20,000 to Mr. X on maturity. D) ₹ 20,000 will be taxable in her hands now, but the same amount along with the accumulated interest thereon will be tax free in her hands and she would get benefit of ₹ 20,000 u/s 80C. 139. Ms. X saw your name with CFP Marks; she wants to know different ways in which the CFP Marks in India can be written. i) CERTIFIED FINANCIAL PLANNERCM ii) CFPCM iii) CFPcm iv) C.F.P. v) CFPCM vi) C F P vii) Certified Financial PlannerCM A) & ii) B) ii), iii), vi) & vii) C) iv), v) & vii) D) ii), v) & vi) 140. You have advised Ms. X to buy a Householders Insurance policy. She wants to know how the value of house and its contents are assessed by the insurance company. A) The value of House and that of various belongings in the house are assessed as per their individual market value. B) House's value is assessed as per its re-instatement value and the value of the various belongings in the house is assessed as per their individual market value. C) The value of House and that of various belongings in the house are assessed as per their reinstatement value. D) The value of House is assessed as per its market value and the value of the various belongings in the house is assessed as per their individual re-instatement value. 141. You have advised Ms. X to buy a Householders Insurance policy, she wants to know whether burglary by domestic staff is also covered. A) It would be covered under the burglary option of Householders Insurance policy. Page # 188

B) If any domestic staff, whether currently employed or engaged in the past, is involved in burglary at the house, the insurance company is not liable to pay for any losses or damages. C) If any present domestic staff is directly involved in burglary at the house, the insurance company is not liable to pay for any losses or damages. D) If any domestic staff is involved in burglary at the house, the insurance company is liable to pay for any losses or damages if proved that it has been deliberate and violent. 142. While preparing Ms. X's Financial Plan, in all your oral or written recommendations, you have taken reasonable steps to place Ms. X in a position to comprehend the recommendations and the basis thereof. You have also taken due care to explain the nature of the investment risks involved in terms she is likely to understand. You have complied with the Rules that relate to the Code of Ethic of _________. A) Professionalism B) Diligence C) Fairness D) Competence 143. Mr. X’s friend Dinesh used to take advice on his investments from a Financial Planner certified by FPSB India who co-mingled the money of Dinesh with his own money. However, the Financial Planner maintained good records to segregate both cash flows. Which of the following Principles has his 1. Financial Planner violated? 2. Integrity 3. Objectivity 4. Fairness 5. Professionalism A) 1 only B) 1, 2 and 4 C) 1,2 and 3 D) 1,2, 3 and 4 144. Mr. X renewed his car insurance which was due for renewal on 18th March, 2009 by sending out a premium cheque on 14th March, 2009 to the insurer for ₹ 4,500 towards a sum assured of ₹ 1 lakh. He received a cover note subject to realization of cheque. Mr. X’s car met with an accident on 27th March, 2009. He enquired from the insurer about his insurance policy for the car and was shocked to learn that the same was not renewed due to dishonor of his cheque. He seeks your advice regarding admissibility of insurance claim on the basis of cover note received. You advise that _______. A) Mr. X is not entitled to the claim amount as the renewal premium cheque was not honored. B) Mr. X is entitled to the claim as he got a cover note as a proof of his having renewed the policy. C) Mr. X is entitled to get full sum assured because the company didn’t inform him about the cancellation of the contract because of dishonoring of his cheque. D) Mr. X has to get approval from Insurance ombudsman for clearance of his claim from the insurer. Page # 189

145. Mr. X has many clients who repose faith in him for his skills, knowledge and ethical dealing. One of his clients, M₹ X who is 70 years of age, has a will in which she leaves her entire estate to her two children, who live separately and never take care of her in any way whatsoever. Mr. X helped her a lot in her medical care during her last days. Before she died, M₹ X had changed her will to add a ₹10 lakh gift to Mr. X. She hired a different attorney to add the codicil to the will. Upon M₹ X’s death her children denied to give the gift to Mr. X stating it was invalid because of undue influence. In the light of the facts cited above which of the following statements is correct? A) The gift to Mr. X is invalid because he used undue influence to induce M₹ X to change her will. B) The gift to Mr. X is valid because there was no undue influence, a different attorney added codicil, and her act of adding codicil was with her free consent. C) The gift to Mr. X is invalid because he knew M₹ X was on her last days so he set the circumstances and obtained the gift. D) The gift to Mr. X is valid because the gift was with her consent though he took the advantage of her loneliness and induced her make a favor. 146. Mr. X working in a Legal Firm as Legal Advisor is always under an apprehension that his profile of giving legal advice to clients is full of risk. He plans to take Professional Indemnity Insurance to minimize his professional risk but he is not sure that what is the scope of the policy? He has approached you for your advice. You advise that the Professional Indemnity Insurance has the following scope: A) Any error and/or omission on his/her part committed whilst rendering professional service. B) Any liability arising out of any criminal act or act committed in violation of any law or ordinance is not covered. C) Legal cost and expenses incurred in defense of the case. D) All of the above. 147. Mr.X has asked you about FPSB India’s nature of constitution. You have explained him that FPSB India is a _________________. A) Self Regulatory Organisation B) Professional Standards Setting Body C) Professional Regulatory Organisation D) A Quasi Government Body 148. You have identified some insurance needs for Mr.X and M₹X as follows: i) Health Insurance ii) Accident & Disability Insurance iii) Home Insurance iv) Travel Insurance 149. According to you what should be the order of priority for these insurance needs? A) i), ii), iii), iv) B) ii), i), iii), iv) C) iii), ii), i), iv) D) i), iii), ii), iv) Page # 190

150. Right now Mr.X & M₹X both are getting House Rent Allowance included in their salary and they are living in Mr. X’s apartment & Mr.X is claiming deductions u/s 24(b) and 80C on account of housing loan EMIs. He wants to know the right proposition of taxation of his HRA. Mr.X shall ______________. A) not get any exemption for HRA B) not get any deduction u/s 24 (b) C) not get any deduction u/s 80C D) get the eligible exemption from HRA along with deduction u/s 24 (b) & 80C 151. Mr.X wants to start an SIP in an Equity MF scheme now for ₹ 1,000 p.m. After 12 months, he wants to redeem every 15th of the month, the value of actual number of units he invested 12 months back and deposit such sale proceeds in his PPF account. Also, he intends to deposit another ₹ 1,000 p.m. in his PPF account on the first of every month from now on and plans to continue for the entire tenure of PPF. Mr.X wants to know whether what he proposes to do after a year is feasible or not, and why? A) Feasible as the amount involved over the year would be less than 70,000 B) Not feasible as there cannot be more than one payment a month C) Feasible, as there is no limit to the number of times one can pay in D) Not feasible as only three payments can be made in a financial year 152. Mr.X has asked you a practicing CERTIFIED FINANCIAL PLANNER CM about the ownership of CFPCM mark in the world. You have explained to him that _________________. A) CFPCM mark is owned by FPSB India B) CFPCM mark is owned by FPSB across the world C) CFPCM mark is owned by CFP Board across the world D) CFPCM mark is owned by FPSB, Denver (US) outside the United States 153. Mr. X wants to invest in order to build up a corpus when he returns to India a decade later. In consideration of different choices available to him, taxation is also one of the aspects which he is considering in the proposed investment. He wants to have least operating costs and optimum tax treatment of his investment kitty when he requires the same. As per the currently prevailing tax provisions, what investment option is most suitable for Mr. X. A) Equity option in any Unit Linked Pension Plans of a life insurance company B) Equity option in any Unit Linked Insurance Policy C) Equity Growth fund in any established Mutual Fund Scheme D) All of the above 154. Mr. X wants to know if he makes some withdrawals from his PF account for arranging funds for Mr. X. How will the interest be calculated on the amount of money withdrawn? A) Interest shall be credited from the beginning of the current year on the money withdrawn, up to the last day of the month preceding the month of such withdrawal. B) Interest shall be debited from the beginning of the current year on the money withdrawn, up to the last day of the month preceding the month of the withdrawal. C) Interest shall be debited from the beginning of the current year on the money withdrawn, up to the last day of the month of the withdrawal. D) Interest shall be credited from the beginning of the current year on the money withdrawn, up to the last day of the month of the withdrawal. Page # 191

155. Mr.X is aware of the New Pension scheme launched by Government of India w.e.f. 01-01-2004. He wants to know whether he can migrate to this scheme from his existing EPS Scheme and if yes whether it is advisable to do so? A) Yes, he should migrate to the new scheme as he can get the equity markets leverage on his till date accumulations and new contributions. B) No he cannot migrate because his existing scheme does not allows migration. C) Yes, because in the new scheme he is permitted to choose his pension contributions according to his comfort. D) No he cannot migrate as it is applicable only for people joining after 31.03.2004. 156. Mr.X has told you that Mr.X’s KVPs are maturing on 28th February 2009. He wants to deposit the maturity proceeds in Mr.X’s NRE account so that it may be utilized by Mr.X in US, if needed at any point of time. What is the right situation in this context? A) He can do so without any restriction. B) No these maturity proceeds are not permitted to be deposited in NRE account. C) These maturity proceeds can be deposited in NRE account only by submission of source of such payment and as per guidelines issued by RBI and provisions of FEMA Act. D) These maturity proceeds can only be deposited in NRE account if Mr.X deposits the same in person during his any of the visits to India. 157. Mr.X is a member of Employees' Pension Scheme. If Mr.X decides to leave his present job at 32 years of age after 8 years of service what will happen to his existing Pension Scheme? (3) A) He can either take withdrawal benefit or scheme certificate so that his 8 year service can be added to any future service that he may put in, in any other covered establishment. B) He cannot take any withdrawal benefit immediately but can add it to any future service that he may put in, in any other covered establishment. C) He can either take withdrawal benefit or scheme certificate only on completion of 10 years of service. D) He can take withdrawal benefit only. 158. As a CFP Certificant, which of the following will not be a correct interpretation of the Rules of Conduct pertaining to the Code of Ethics of Diligence for you while dealing with Mr.X? (2) A) A significant recommendation may be given orally, however confirmation must be given in writing as soon as possible. B) As a CFP Certificant, you are considered to be more knowledgeable than Mr.X and hence may not need to explain the recommendation and basis in a manner that Mr.X may comprehend. C) As a CFP Certificant, you shall enter into an engagement with Mr.X only after securing sufficient information to be satisfied that Mr.X's needs and objectives warrant the relationship. D) As a CFP Certificant, you shall confirm in writing to Mr.X where a subsequent instruction given by him alters the financial strategy of his portfolio under your supervision. 159. Mr.X wants to know whether he is eligible to withdraw from his Employees’ Provident Fund for purchase of his new house. (2) Page # 192

A) Yes, as he has been a member of the fund for more than 3 yea₹ B) No, as he has not been a member of the fund for more than 10 yea₹ C) Yes, as he has been a member of the fund for more than 5 years, and provided he purchases the house in his own name or in his own name and in his wife’s name. D) Yes, as he has been a member of the fund for more than 5 years, and provided he purchases the house in his own name or in his wife’s name. 160. Mr.X plans to take a loan from a bank for purchasing a house in Ahmadabad. He wants to know, against which type of mortgage do the banks normally lend home loan? (3) A) Simple Mortgage B) Usufructuary Mortgage C) English Mortgage D) Equitable Mortgage 161. Mr.X’s father wants to gift ₹ 5 lakh (in cash) to Mr.X to buy a house. Mr.X wants to know how this receipt will be treated in his hands from Income Tax perspective. (2) A) No tax to be paid by Mr.X as it is gifted to him to buy a house. B) No tax to be paid by Mr.X as gift in cash from a father to son is tax free. C) Entire receipt will be taxable in the hands of Mr.X as it is received in cash. D) Entire receipt will be taxable in the hands of Mr.X as it is more than ₹ 50,000. 162. Mr.X’s employer is going to give him a gift worth ₹ 60,000 (in kind) on his wedding anniversary. Mr.X wants to know the tax consequence of this transaction? (3) A) Gift value is taxable for Mr.X under the head ‘Salary’ B) Mr.X’s employer is liable to pay FBT on the full value of gift C) No tax consequence arises for Mr.X and his employer as the gift is in kind D) Rs 50,000 is tax free and balance ₹ 10,000 is taxable under the head ‘Salary’ for Mr.X 163. After preparing the Financial Plan of Mr.X, you have given following notes to the Plan: (2) I. These recommendations are made for your benefit only. II. These recommendations are based on the information provided by you on your current situation; we expect this information to be complete and accurate. III. Returns on investments will depend on market conditions and the policy of fund management followed by fund manage₹ IV. The investments planned for you are long term in nature; therefore volatilities of short term in nature should be ignored. These notes are __________ to your plan. A) disclosures B) disclaimers C) executive summary D) additions 164. Mr.X & Mr.X want a written assurance from you that in case they appoint you as their Financial Planner, in no case you will disclose their personal/financial information to any of your firm’s partners and the same shall remain exclusively with you. With reference to FPSB Code of Ethics examine the following statements in this context: I. Yes, you can give such an assurance Page # 193

II. No, you cannot give such an assurance III. You can give such an assurance subject to specific written consent from all the partners of the firm IV. In this case the client should be dealt in personal capacity outside the scope of the firm Which of the above statement/s is/are true? (2) A) Both 1 & 4 B) Only 1 C) Both 1 & 3 D) Only 2 165. Mr.X wants to know from you the difference between the “Portfolio Management Scheme” being offered by many prominent financial institutions and the services offered by you as a Financial Planning practitioner. Examine the following statements: I. In PMS there is a unique profit & loss sharing structure while a CFP is not entitled to participate in profits of his/her client II. PMS is more of a packaged product to suit broad requirements rather than meeting specific needs of clients III. PMS is mainly offered by financial institutions while Financial Planning service is mainly dominated by Individuals only IV. In PMS, the service provider may not cater to overall Financial Planning objectives of the client Which of the above statement/s correctly differentiate/s a PMS from a Financial Planning Service? (2) A) Only 1 B) Only 1 & 3 C) Only 2 & 4 D) Only 1, 2 & 4 166. Mr.X has informed you that he has pledged some NSCs in a government department in pursuance of terms & conditions of the contract with his firm. The NSCs have Mr.X’s name as a nominee. Mr.X wants to know whose right shall supersede in such NSCs in case of a dispute. According to you it would be___________. (2) A) Nominee’s right shall supersede over pledgee B) Pledgee’s right shall supersede over nominee only C) Original holder’s (Mr.X’s) right shall supersede over all others D) Pledgee’s right shall supersede over all others 167. Mr.X has been buying gold ornaments from time to time as investment. You as a planner however advise that she should also look at the features of Gold ETFs for investment purposes. I. Gold ETFs score over physical gold as she can have same returns from gold, but without the making charges II. There is no wealth tax on Gold ETFs & long term capital gain becomes applicable after a year III. There is no entry load or exit load in a Gold ETF IV. Problems relating to purity of gold bought, storage & insurance costs are avoided in Gold ETFs Which of the above statements are relevant and correct? (2) Page # 194

A) 1 & 2 B) 2 & 3 C) 1, 2 & 4 D) 2 & 4 168. Mr.X is due to get refund from Income Tax Department of two earlier Assessment yea₹ His friend told him that this amount can be set off against the current tax liability. According to you this information is __________. (2) A) True B) False C) True, if specific permission is taken from the assessing officer D) True, if a letter is taken from the concerned Commissioner of Income tax and attached with the Returns 169. Some time back Mr. X’s investment advisor, also a CFP, recommended him a savings product stating that it offered an assured annual return of 12%. Mr. X was sceptic 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 yea₹ According to you ________. (3) A) the advisor has violated Code of Ethics of Fairness B) the advisor has violated Code of Ethics of Integrity C) the advisor has violated Code of Ethics of Professionalism D) the advisor has violated Code of Ethics of Diligence 170. Mr. X proposed to buy another life insurance policy which also offered Critical Illness Rider for an additional premium. Mr. X was considering a sum assured of ₹ 10 lakh for the death benefit and ₹ 2 Lakh under Critical Illness. Before finalizing the same Mr. X wants to know that in case he is identified with a disease, covered under Critical Illness Rider, after 2 years of having taken the policy, what amount would he receive as claim under the Critical Illness Rider? (2) A) A sum of ₹ 2 Lakh shall be paid when such a disease is identified and certified by a Doctor. B) Actual Expenses, subject to a maximum of the Rider amount, shall be paid after treatment of disease. C) Rider benefit is available only in case of death of the Insured person by the disease. D) A sum of ₹ 2 lakh shall be paid when disease is identified and another ₹ 2 Lakh shall be paid at the time of death. 171. Mr.X’s relative, Prashant, met with an accident while driving the car. His car insurance had expired a couple of days before the accident. Mr. X wants to know whether Prashant’s claim will be settled by the insurance company in such a situation. (3) A) This is to be seen in light of the governing terms and conditions of the expired policy. B) If the accident occurs within 15 days after the expiry of policy the claim is payable. C) The cover lapses the moment the policy expires thus denying him any claim. D) Insurance company will take renewal premium along with penalty and then settle his claim. 172. Mr. X’s brother in law is an NRI. He wants Mr. X to make some investments on his behalf whenever the right opportunity arises. You suggest: (2) A) Mr. X’s brother in law should prepare a Notarized affidavit in Mr. X’s favor. Page # 195

B) Mr. X’s brother in law should prepare a Special Power of Attorney specifying transactions that can be carried out by Mr. X. C) Mr. X should prepare a General Power of Attorney that gives him the right to do transactions on behalf of his brother in law. D) Mr. X should not get into such an arrangement due to complex tax laws related to NRI investments. 173. Mr. X has not done any Estate Planning as of now. Even his father has not prepared any Estate Planning documents. As Mr. X is the only son of his parents, along with his 3 sisters, what is most suitable for him? (3) A) Mr. X’s father should first prepare his Will and on the basis of that Will Mr. X should prepare his own Will. B) Mr. X should prepare his own Will without waiting for his father’s Will. C) There is no need for any Estate Planning as Mr. X is the only son of his parents. D) Mr. X should prepare his Will by including his father’s property but with an inbuilt provision for his sisters on account of that property. 174. During the initial discussions Mr. X wants to know from you the nature of compliance by which you are bound to FPSB India’s Code of Ethics. You have explained to him that for every practicing CFP certificate it is _____ to adhere to FPSB India’s Code of Ethics. (2) A) Discretionary B) Mandatory C) Obligatory D) Depends upon the country of operation 175. Keeping in view the present uncertainty in the global financial markets, Neeru wants to know the most probable risk faced on their portfolio of GOI taxable bonds. According to you which amongst the following is the most likely option? (2) A) Volatility B) Price C) Currency D) Inflation 176. Mr. X’s company is listed on one of the key regional Stock Exchanges. While discussing the success of Indian Stock Exchanges in securing a prominent place among their global peers Mr. X has asked you the difference between the method of calculation of Sensex of BSE and Nifty of NSE in India. You have explained this as_________. (2) A) Sensex is calculated on the basis of market capitalization method while Nifty is calculated on the basis of free float market capitalization method B) Nifty is calculated on the basis of market capitalization method while Sensex is calculated on the basis of free float market capitalization method C) Both are calculated on the basis of market capitalization method D) Both are calculated on the basis of free float market capitalization method Page # 196

177. Mr. X has not prepared any Will as on date. He wants to know in case he dies intestate, as per prevailing Hindu Succession law in India, which of his existing family member/s can be denied share of his estate in case of a dispute. (3) A) His father. B) His mother and father. C) His daughter if she is married. D) All members have a share on his property on an equitable basis. 178. Till date the couple has never given any attention to their individual insurance needs. Most of the insurance needs of the family are taken care by the company’s group insurance policy which provides all common risk protection to the family. You have explained to Mr. X that this group insurance policy may not cater one important risk which is ________. (2) A) Life insurance B) Health insurance C) Liability insurance D) Disability insurance 179. Mr. X has told you that Mr. X’s would be father in law wants to give a sum of ₹ 10 lakh to the family on the occasion of Mr. X and Priya’s marriage next year. Mr. X wants to know from you how should this gift be accepted from Tax Planning perspective? (3) A) It should be received in Priya’s name B) It should be received in Mr. X’s name C) It should be received in Mr. X’s father name D) It should be received in the name of either Mr. X or Priya 180. Ajay has informed you that his insurance agent has not deposited one of the insurance premiums collected in cash from them, to the life insurance company. The family came to know about this when they got a notice informing the possible lapse of the policy. Ajay wants to know the most suitable remedy available to them in such a situation. (3) A) They can claim premium from the insurance company for which the agent was working. B) They can get a criminal case registered against the agent and also file a complaint against the agent with the insurance company. C) They can pursue with the agent to refund their premium. D) They can get a case registered against the company and the agent, both. 181. M₹ X wants to know that if at any point of time they are required to withdraw some amount prematurely from Aakash and Sanjana’s PO RD account, what rate of interest will be charged from the account holders on the withdrawal amount as per PO RD Rules. (3) A) No premature withdrawal is allowed. B) 1% + applicable rate of interest in PO RD account. C) 2% + applicable rate of interest in PO RD account. D) 15% per annum. 182. M₹ X has told you that her husband is willing to open a Senior Citizen Saving Scheme account after his retirement. She wants to know whether the family can also open a separate account in the same scheme in her husband’s HUF name at the same time. According to you_______. (2) A) No they cannot. Page # 197

B) Yes they can. C) Yes, they can but subject to maximum amount deposited in her husband’s individual account or ₹ 15 lakh whichever is lower. D) Yes, they can but subject to maximum amount deposited in her husband’s individual account or ₹ 15 lakh whichever is higher. 183. Ajay has told you that that one of his friends was consulting another CFP who moved a major chunk of his friend’s investments into equities when markets were at their peaks resulting in loss of a major portion of that investment. His friend is very upset with this as he was not taken into confidence before taking this step. Ajay wants to know what Code of Ethics prevents a CFP from committing such actions. (2) A) Code of Ethics of Objectivity B) Code of Ethics of Integrity C) Code of Ethics of Professionalism D) Code of Ethics of Diligence 184. Ms. X seeks your opinion on taking suitable risk covers, having seen the tragedy with her husband. Your advice is ______. (3) A) she should go in for a term insurance to take care of her mortgage liability B) she should take disability insurance for herself and health insurance for all members of the family C) a suitable health insurance for Clifford is must during his stay in Germany D) All of the above 185. The fatal car accident in which Ms. X lost her husband, the driver of the car sustained severe injuries but has recovered now without any permanent disability. Who is liable to pay compensation towards the driver’s medical expenses and loss of earnings? (3) A) The insurance company insuring the vehicle involved in the accident with Mr. Martis’ car, is liable to pay the compensation provided the vehicle is insured for third party claims. B) None. The driver being the risk carrier should have insured himself against such an eventuality. C) If the driver approaches Motor Accident Claims Tribunal, the compensation as awarded will be payable from Ms. X’s own pocket. D) Mr. Martis’ car insurance company shall pay such compensation; the policy purchased being a comprehensive one covering additional liabilities. 186. Before finalizing the Financial Plan, Ms. X tells you that she wants to entrust the estate issues to a solicitor friend, Mr. Larry D’Silva. Which of the following is your best stand? (2) A) This is not permissible as per the Rules of FPSB India. B) This is permissible subject to such an arrangement finding an explicit mention in the Financial Plan for the said activity. C) This is permissible subject to the advice of the solicitor being integrated into the Financial Plan and monitored along with the Plan. D) You may enter into an MoU with the Solicitor and may also have a revenue sharing model. Page # 198

187. You have started working on the financial plan for Dr. Mishra. One day he called you & told that for Estate Planning aspects of his financial plan he shall be taking the services of his brother, an advocate. As per FPSB Code of Ethics how would you proceed in this aspect? (2) A) This is not possible as the Financial Plan has to cover all aspects. B) This must be stipulated in writing. C) Prior consent of Dr. Mishra’s wife must be taken. D) Prior consent from his brother must be taken. 188. One day, while sitting in the office of his stock broker, Dr. Mishra heard some discussions about demutualization of Stock Exchanges in India. Dr. Mishra is unaware about this term and has thus asked you about this concept. According to you _________. (2) A) in demutualization, the administration of Stock Exchange is kept isolated from its trading brokers/members B) demutualization refers to privatization of all government owned Stock Exchanges in India C) demutualization refers to Self Regulatory Organizations (SRO) structure of Stock Exchanges in India D) All of the above 189. Dr. Mishra is planning to take a life insurance policy as per you advice. His agent has suggested him that he should take “Critical Illness Rider” on the new policy and thereby save 60% portion of his health insurance premium by taking this rider with this policy. Dr. Mishra wants to take your advice whether he should replace his health insurance by this rider as by doing this transaction he is saving 60% of his current health insurance premium. According to you, he should ____________. (2) A) not replace his health insurance with this rider as both have different features B) replace this health insurance as there is a direct saving on the premium C) reduce his health cover by 50% and take the 50% rider as suggested by the agent D) Both options are same and anyone may be opted 190. Recently one of the life insurance agents has informed Dr. Mishra that if one takes a life insurance policy under “Key Man Insurance”, one can get deduction of the premium of this policy from their taxable income. According to you ________. (2) A) Dr. Mishra can claim deduction but the maturity value of this policy shall be taxable in his hands B) Key Man Insurance is not applicable in his context C) this is applicable on second life insurance policy only D) None of the above 191. Acting upon your advice Dr. Mishra decides to take a life insurance plan for himself. At the time of choosing mode of payment, Dr Mishra has asked you the difference between various modes of payment of insurance premium (monthly/quarterly/half yearly/yearly) from claims perspective, in case if any. According to you ___________. A) monthly mode is better because in case of claim the same shall be payable against the minimum possible paid premium B) there is no difference among all options from claims perspective C) yearly mode is better because it offers a rebate in premium to the Life assured D) choice may be different depending upon the age of the life assured Page # 199

192. Sneha wants partition of his father-in-law’s HUF to claim her share and her husband’s share out of the HUF’s assets. In principle, Dr. Mishra is not keen for the same and wants to know whether his wife can legally demand partition of his father’s HUF as she is also one of the member in the same? (2) A) Yes B) No C) With prior permission from IT Department only D) Data insufficient 193. A Mutual Fund agent has told Dr. Mishra that bigger the AUM of the fund the better it is. Which of the following statements are correct ? 1) The bigger the fund AUM, the lower the expense ratios and in that sense it could be better. 2) The bigger the funds AUM, lesser are the chances of showing break-out returns as stock buying becomes difficult without moving the price upwards. 3) The bigger the fund AUM the worse-off a mid & small cap fund would be, due to its limited pool of stocks. 4) The smaller the AUM of a small cap fund the better it is due to lower expenses & higher returns.(3) B) Only 1 is correct C) Only 1 & 2 are correct D) Only 1, 2 & 3 are correct E) All are correct 194. While interacting with you during the data collection sessions, Gunjan and Neerja became so impressed with your professional approach and the trust created that the couple requested you to become a whole time legal guardian of their kids regarding execution of all required financial steps at every stage in future even without further recourse to the couple. As per FPSB Code of Ethics, is this possible for you? (2) A) Yes B) Yes, but you can do it in your individual capacity and not in professional capacity. C) Yes, but in that case you will not be in a position to charge any professional fee from the couple. D) No 195. Gunjan’s housing loan was granted on “Equitable Mortgage” basis. In view of the current credit crisis hovering over major world economies, Gunjan’s lender wants to convert this loan on the lines of “English Mortgage” clause. Gunjan wants to know if he accepts this option, what major change will occur in the terms and conditions governing his housing loan? According to you, if he accepts the new clause he will have to _______. (2) A) deposit the title deed of the property with the lender right now B) sell his property to the lender right now on the condition that if at any time Gunjan fails to repay the outstanding loan, the sale shall be absolute, otherwise it will be void C) transfer the possession to the lender right now with a condition of re-transfer on repayment of the entire loan amount D) All of the above Page # 200