Aim 2015 Mock Exam With Answers

Exam Name : AIM 2015
Total Questions : 60
Description :
Questions Which of the following assets are likely to have low levels of market efficiency
Marks 1
No Options Details Correct Option
1 Private Equity
2 Listed Equity Shares
3 Listed Corporate Bonds
4 Treasury Bonds
Questions An hedge fund earned a return of 42% in year 1 and -16% in year 2. Calculate the annualized holding period
return of an investor who invested at the beginning of year 1 and exited the fund at the end of year 2
Marks 1
1 9.20%
2 19.30%
3 26.00%
4 13.00%
Questions Which of the following is correct about capital super asset class?
Marks 1
1 Capital assets are defined by their claim on future cash flow of a company
2 Capital assets are defined by their ability preserve the value of initial capital invested
3 Capital assets are defined by their ability to provide a steady state of return
4 Capital assets are defined by their use as inputs in creating economic value
Questions An hedge fund portfolio has a standard deviation of 14% as compared to the benchmark index which has a
standard deviation of 16%. The correlation between the portfolio and benchmark is estimated at 0.52. Calculate
the beta of the portfolio
Marks 1
1 0.46
2 0.59
3 0.88
4 1.14
Questions A risk neutral investor is evaluating an investment of USD 1,000 that can either become USD 2,000 or USD 500
at the end of 1 year. Both outcome has equal probability. Calculate the expected rate of return for the investor
Marks 1
1 25.00%
2 0.00%
3 100.00%
4 -50.00%
Questions Which of the portfolios is most likely appropriate for a client who has a high degree of risk tolerance? Fixed
Income Equity Alternate Investments Portfolio 1 25% 60% 15% Portfolio 2 60% 25% 15% Portfolio 3 15% 60%
25%
Marks 1
1 Portfolio 3
2 Portfolio 1
3 Portfolio 2
4 Either Portfolio 1 or 3
Questions Which of the following more accurately describes systematic risk
Marks 1
1 Systematic risks are those that affect the market as a whole and thus cannot be diversified
2 Systematic risks are predictable macro economic risk and thus are not rewarded by the market
3 Systematic risk arises on account of failure in software systems
4 Systematic risks are unpredictable risks that may or may not affect a specific investment and hence
are not rewarded
Questions The following is the list of 10 worst weekly returns of a portfolio in the last 100 weeks: 3%, 1%, -1%, -2%, -3%, -
6%, -8%, -12%, -15%, -16% If the portfolio value is USD 30 million, calculate weekly VaR(5%) of the portfolio
Marks 1
1 USD 900,000
2 USD 180,000
3 USD 9 million
4 USD 4.5 million
Questions John has calculated VAR of a portfolio. At 90% confidence interval, he estimate VAR to be USD 100,000. Which
of the following is correct interpretation of the same?
Marks 1
1 One out of 10 days, the loss could exceed USD 100,000
4 One out of 10 days, the loss would be below USD 100,000
Questions Which of the following is an example of a Mezzanine Debt?
Marks 1
1 Convertible Bond
2 Secured Subordinate Debt
3 Unsecured Senior Debt
4 Zero coupon bonds
Questions A PE fund is evaluating investment in an Indian company that has an EBITDA of INR 300 million. The fund
expects to acquire 30% of the business at EV/EBITDA of 5x. The company currently has INR 600 million in
Debt. Calculate the purchase consideration payable by the fund
Marks 1
1 INR 270 million
2 INR 450 million
3 INR 580 million
4 INR 900 million
Questions A PE fund has invested USD 100 million to acquire 40% stake in a company. The company's EBITDA is
estimated to reach USD 80 million in five years time and the company is expected to be debt free. What should
be the exit multiple so that the fund earns IRR of at least 25%?
Marks 1
1 9.5X
2 3.8X
3 3.9X
4 2.6X
Questions Which of the following factors enable real estate investors to earn super normal returns
Marks 1
1 Leverage
2 Location
3 Tax-benefits
4 Inflation
Questions An investor bought a real estate property for INR 5 million of which INR 4 million was funded through bank
borrowing @8% interest rate. At the end of the year, the investor sold the property for INR 6 million. Calculate
the rate of return earned by the investor on his investment.
Marks 1
1 68.00%
2 20%
3 100%
4 13.60%
Questions A mall in Orchard Road in Singapore had a gross annual income of SGD 4 million and net operating income of
SGD 2.8 million. The mall was recently sold for SGD 40 million. Calculate the gross income multiplier (GIM) and
capitalization rate (Cap rate) for the property.
Marks 1
1 GIM: 10; Cap Rate: 7.0%
2 GIM: 14.3; Cap Rate: 7.0%
3 GIM: 10; Cap Rate: 10.0%
4 GIM: 14.3; Cap Rate: 10.0%
Questions A hedge fund charges performance fee @8% of the annual profit subject to being above the high water mark. The
fund had the highest NAV of USD 230 million in 2013 which subsequently fell to USD 215 million in 2014. During
2015, the fund value increased by USD 20 million. All changes in NAV were because of profit/(loss) of hedge
fund and no withdrawals or fresh funds were raised. Calculate the performance fee payable for 2015.
Marks 1
1 USD 400,000
2 USD 1.6 million
3 USD 5 million
4 USD 18.4 million
Questions The NAV of a hedge fund's unit which was at USD 74 at the beginning of the year reached its peak NAV of USD
84 before falling down to USD 68 and eventually ended the year at USD 72. Calculate the drawdown of the
hedge fund during the year.
Marks 1
1 16
2 12
3 2
4 10
Questions Which of the following is more accurate about core-satellite approach to portfolio construction?
Marks 1
1 The core portfolio should comprise passively managed investment while the satellite portfolio would
be actively managed
2 The core portfolio should comprise exclusively of fixed income investment while the satellite portfolio
comprise of equity and alternative investment
3 The core portfolio should comprise exclusively of traditional investments while satellite portfolio
comprise of alternative investment
4 The core portfolio is managed locally while the satellite portfolio is managed by offshore experts
Questions Which of the following is true about capital market line (CML)?
Marks 1
1 CML represents a portfolio that is constituted using the market portfolio and a risk free instrument
2 CML shows the relationship between risk free rate of return and beta
3 CML shows the relationship between individual securities return and their beta
4 CML shows the relationship between individual securities return and their standard deviation
Questions A portfolio had EUR 50 million at the beginning of the year. The market value of the fund increased to EUR 55
million after six months when a new investor invested another EUR 10 million into the fund. The value of the fund
at the end of the year was EUR 70 million. Calculate the time weighted average rate of return of the fund.
Marks 1
1 18.46%
2 8.80%
3 17.70%
4 37.00%
Questions A portfolio had EUR 50 million at the beginning of the year. The market value of the fund increased to EUR 55
million after three months when a new investor invested another EUR 10 million into the fund. The value of the
fund at the end of the year was EUR 70 million. Calculate the money weighted average rate of return.
Marks 1
1 13.60%
2 8.30%
3 16.70%
4 20%
Questions A managed futures product of an hedge fund generated CAGR of 14% over a three year period with standard
deviation of 20% and maximum draw down of 40%. The risk free rate during the period averaged 5%. Calculate
the Calmar Ratio
Marks 1
1 0.35
2 0.45
3 0.7
4 0.23
Questions Which of the following term best describes a market condition where futures contract trade at a lower price
compared to the expected spot price?
Marks 1
1 Backwardation
2 Inverted market
3 Contango
4 Normal Market
Questions Which of the following is the most important difference between a securitized debt and a secured debt?
Marks 1
1 In a secured debt, the onus of repayment is still on the borrower whereas in case of securitized debt,
the repayment will be funded purely by the cash flow of the underlying asset
2 Secured debt can only be issued by a bank whereas securitized debt can be issued by anybody
3 Secured debt is always secured by real estate assets whereas securitized debt is secured by
mortgage loans
4 Both secured debt and securitized debt are similar except that the underling asset of securitized debt
is an underlying loan portfolio
Questions A special purpose vehicle created for securitizing certain loan portfolio wants to purchase CDS contract on its
loan portfolio of GBP 200 million. The annuity factor for premium is 4.5 and the expected present value of claim
receivable under CDS contract is GBP 30 million. Calculate the CDS spread payable under the contract.
Marks 1
1 3.40%
2 22.30%
3 15.00%
4 2.30%
Questions A company has issued a zero coupon bond with nominal value of USD 200 which has three year to maturity.
There is 70% probability that the zero coupon bond would be paid in fully and 20% probability that the company
would be able to pay only USD 80 per. If the risk free rate is 6%, what should be expected credit spread?
Marks 1
1 4.60%
2 0.80%
3 3.60%
4 2.40%
Questions An investor bought 10 shares of JP Associates on February 14, 2011 at Rs. 85.44 and sold at Rs. 85.89 on
February 22, 2011. In between, the prices had touched Rs. 90.44 on February 17. The investors potential gain in
this transaction is
Marks 1
1 Rs. -45.5
2 Rs. 50
3 Rs. 5
4 Rs. -50
Questions An investor holds equal number of Cipla and Ranbaxy scrips in his portfolio which he bought at Rs. 286.05 and
Rs. 403.15 respectively. If the current prices of these scrips are Rs. 322 and 399.2, the portfolio return will be
Marks 1
1 4.64%
2 12.57%
3 11.59%
4 13.55%
Questions An investor holds a portfolio of securities consisting of Tata Motors, TCS, and Infosys with weights of 20%, 20%
and 60% respectively. If the Beta of these securities is 1.15, 1.65, and 2.45 respectively, what would be the
portfolio Beta?
Marks 1
1 1.96
2 1.71
3 1
4 1.25
Questions If stock return is 13%, market return is 20%, and risk free rate of return is 6.50%, the beta of security is
Marks 1
1 0.48
2 1
3 0.5
4 0.98
Questions Markowitz model is otherwise known as:
Marks 1
1 Modern Portfolio Theory

2 Portfolio Theory
3 Modern Theory
4 Markowitz Theory
Questions Markowitz model gives more importance to
Marks 1
1 Diversification
2 Risk
3 Return
4 Allocation
Questions Simple diversification:
Marks 1
1 Reduces Total Risk

2 Increases Total Risk
3 Eliminates Total Risk
4 Diversifies Total Risk
Questions If a security has a return of 20% or 30%, with 0% probability, the expected rate of return would be:
Marks 1
1 0%
2 30%
3 20%
4 50%
Questions According to Sharpe model, the variance explained by the index is known as:
Marks 1
1 Systematic Risk
2 Unsystematic risk
3 Systemic Risk
4 None of the Above
Questions ______ can be used as a benchmark measuring rod for evaluating portfolio performance:
Marks 1
1 Mutual Funds
2 CAPM
3 NAV
4 NIFTY
Questions Market return of a portfolio is 13%, risk-free return is 7.5%, and portfolio beta is 1.35. Then, portfolio return is:
Marks 1
1 14.92%
2 1.49%
3 0.14%
4 0.014295
Questions Excess average return of a protfolio A is 10.5%, beta is 1.35, and excess average market return is 9.5%. The
same data for portfolio B is 8.5, 0.95, and 7.5% respectively. Which portfolio is a better performer as per Jensen'
s performance measure?
Marks 1
1 B is better than A
2 A is better than B
3 Both are equal
4 Both are poor
Questions _____ is obtained by computing the regression on the differences between the portfolio return and the risk free
rate of return.
Marks 1
1 Jensen's Measure
2 Sharpe Index
3 Treynor Index
4 Markowitz Index
Questions ________ gives a summary measure for portfolio performance by properly adjusting the risk.
Marks 1
1 Sharpe Performance Index

2 Jensen's Measure
3 Treynor Index
4 Markowitz Index
Questions Conservative portfolios include the securities with high growth and high risk.
Marks 1
1 FALSE
2 TRUE
3 CAN'T BE DETERMINED
Questions Under variable ratio plan, the investor has the freedom to revise portfolio components.
Marks 1
1 TRUE
2 FALSE
Questions Dollar cost averaging is an effective mechanism that eliminates the need to go through the rigorous process of
securities selection.
Marks 1
1 FALSE
2 TRUE
Questions Many countries have imposed withholding tax to prevent massive capital flight.
Marks 1
1 FALSE
2 TRUE
Questions The study conducted by ______ revealed that default risk, time premium, deflation and change in expected
sales turnover contributed to 25% of the variation in S&P Composite Index
Marks 1
1 Burmeister and McElroy
2 Chen, Roll & Ross
3 Ross & Roll
4 Fama and French
Questions Efficient Market Hypothesis is a theory developed by Fama and French in 1960
Marks 1
1 FALSE
2 TRUE
Questions A strong form of market discounts all information, sometimes including invalid information like rumours
Marks 1
1 TRUE
2 FALSE
Questions One way of testing market efficiency is to find out whether any stock has given any Abnormal Average Return
during an event day
Marks 1
1 TRUE
2 FALSE
Questions According to filter rule, an investor trades a stock when its price change exceeds a particular PE ratio that is set
for it.
Marks 1
1 FALSE
2 TRUE
Questions PE ratios do not have any relationship with the value of stock of a company.
Marks 1
1 FALSE
2 TRUE
Questions Exposure indicates
Marks 1
1 Sensitivity to changes in asset prices

2 Sensitivity to changes in risk
3 Sensitivity to changes in portfolio
4 Sensitivity to changes in assets
Questions A year ago, you invested $2000 in a savings account that pays an annual interest rate of 6%. What is your
approximate annual real rate of return if the rate of inflation was 3% over the year?
Marks 1
1 3%
2 4%
3 10%
4 7%
Questions Market risk is best measured by
Marks 1
1 Alpha
2 Beta
3 Standard Deviation
4 Correlation of variance
Questions If an investor bought securities worth Rs.30000, showing beta of 1.2, it indicates that his exposure to market
volatility is:
Marks 1
1 Rs. 36000
2 Rs. 25000
3 Rs. 30000
4 Rs. 29000
Questions The difference between ordinary shareholders and Differential Voting Rights Shareholders is that:
Marks 1
1 DVR shareholders have lesser voting rights.

2 DVR Shareholders have more voting rights.
3 DVR Shareholders have no voting rights.
4 DVR Shareholders have equal voting rights
Questions The significant feature of Zero Coupon Bond is that:
Marks 1
1 They do not carry interest coupons.

2 They do not carry interest
3 Interest is paid in cash periodically
4 Interest is credited to the bank account periodically
Questions Bonds with lower credit rating and high default risk are known as:
Marks 1
1 Junk Bonds.
2 Default Bonds
3 High Risk Bonds
4 Convertible Bonds
Questions Commercial papers are issued in denominations of:
Marks 1
1 Rs. 5 lakhs
2 Rs. 10 lakhs
3 Rs. 15 lakhs
4 Rs. 50 lakhs
Questions Which of the below is not a tangible asset?
Marks 1
1 Gilts
2 Forestry investment.
3 Antiques investment.
4 Film financing.
Questions Which of the following costs undermine the return on antiques?
Marks 1
1 The auctioneer's commission. And Buyers Premium

2 Stamp duty.
3 The buyer's premium.
4 Deterioration.

Aim 2015 Mock Exam With Answers

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Exam Name : AIM 2015

Questions Which of the following more accurately describes systematic risk

Questions Which of the following is an example of a Mezzanine Debt?

Questions Markowitz model is otherwise known as:

1 Modern Portfolio Theory

Questions Markowitz model gives more importance to

Questions Simple diversification:

1 Reduces Total Risk

1 Sharpe Performance Index

Questions Exposure indicates

1 Sensitivity to changes in asset prices

Questions Market risk is best measured by

1 DVR shareholders have lesser voting rights.

Questions The significant feature of Zero Coupon Bond is that:

1 They do not carry interest coupons.

Questions Commercial papers are issued in denominations of:

Questions Which of the following costs undermine the return on antiques?

1 The auctioneer's commission. And Buyers Premium

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