Case – A: (Reference date: 2nd April, 2013)

Ashwin Agarwal, aged 34 years, is employed with an oil exploration company since December 2002. He is an engineer by profe
extensively in different parts of the world in connection with the company’s projects. He has approached you, a CFPCM practiti
Sumedha, aged 31 years, is working in a private sector bank as Manager. They have a son Prateek aged 4 years, and a year old
EMI on loans and insurance premium). Ashwin’s parents stay in their ancestral house at Bikaner. His father is engaged in a sma
p.m.

Life Parameters:
Ashwin Agarwal Current Age
Wife Sumedha Current Age:
Son - Prateek Current Age:
Daughter - Aslia Current Age:
Ashwin’s expected life : 80 years
Sumedha’s expected life : 82 years
The family’s monthly house hold expenses are Rs. 40,000 p.m.
Ashwin Agarwal’s monthly salary:
Basic Salary : Rs. 48,000
Dearness Allowance 1 : 50% of Basic salary 1 100% of DA received forms part of salary for retirement bene
House Rent allowance : Rs. 12,000
Transport Allowance : Rs. 4,000
Medical Reimbursement : Actual expenses up to Rs. 1,250 per month
Entertainment Allowance : Rs. 5,000
PF & Superannuation : 12% of Basic Salary
Sumedha’s monthly salary:
Basic Salary : Rs. 30,000
Dearness Allowance : 30% of Basic salary
House Rent allowance : Rs. 8,000
Transport Allowance : Rs. 800
Executive Allowance : Rs. 7,500
PF & Superannuation : 12% of Basic Salary

Couple’s Assets & Liabilities (As on 31st March, 2012 unless otherwise specified in foot notes)
Assets:
House : Rs. 35.00 lakh
Car : Rs. 3.50 lakh (Depreciated value)
EPFO account of Ashwin
NPS account of Sumedha
PPF (maturity on 1st April 2019): Rs. 2.90 lakh
Insurance – Money Back policy^ 2 : Rs. 4.00 lakh 2 Purchased the 20-year policy on 18th November, 2005; annu
Child Plan – Life Insurance^3 : Rs. 20.00 lakh (Sum Assured) 3 Purchased by Ashwin on the life o
Gold ornaments : Rs. 6.50 lakh
Sovereign Gold Bonds^4
Equity Mutual Fund scheme : Rs. 5.07 lakh
Balanced Mutual Fund scheme : Rs. 3.28 lakh
Debt Mutual Fund Scheme : Rs. 1.73 lakh
Portfolio of Equity Shares : Rs. 6.32 lakh
Bank fixed deposit^4 : Rs. 2.50 lakh 4 Subscribed on 01.09. 2010 @ 10% p.a. with interest compou
Cash/Bank Balance : Rs. 0.75 lakh
Liabilities:
Home loan^5 : Rs. 12.97 lakh (Principal outstanding) 5 Home loan of Rs. 17 lakh taken on 1st November, 2006 at a fi
Car Loan^6 : Rs. 2.93 lakh (Principal outstanding) 6 Car loan of Rs. 4.50 lakh taken on 1st April, 2010 at a fixed in

Goals:
1. To provide for higher education of Prateek and Aslia. The expenses, at current cost, required for each at their
respective age of 18 years, are Rs. 3 lakh and for 4 subsequent years, Rs. 2 lakh p.a.

2. Marriage expenses of Rs. 15 lakh (current cost) for each child at their respective age of 27 years.

3. Retirement corpus at Ashwin’s age of 60 to sustain the same lifestyle till their expected life time.

4. A bigger house a year from now, valued at Rs. 65 lakh today.

5. To build a separate dedicated fund for annual vacation expenses of Rs. 2 lakh (current cost) to be utilized 10
years from now until Ashwin’s retirement.

Assumptions:
A. Regarding long-term pre-tax returns on various asset classes:
1. Equity & Equity MF schemes /Index ETFs : 11.00% p.a.
2. Balanced MF schemes : 9.00% p.a.
3. Bonds/Govt. Securities/Debt MF schemes : 7.00% p.a.
4. Liquid MF schemes : 5.50% p.a.
5. Gold & Gold ETF : 7.50% p.a.
6. Bank/Post Office Term Deposits
7. Public Provident Fund/EPFO

B. Regarding economic factors (long-term view):

1. Inflation : 5.50% p.a.
2. Risk free rate : 6.50% p.a.
3. Real Estate appreciation : 8.00% p.a.

Cost Inflation Index:

1981-82 100 1993-94
1982-83 109 1994-95
1983-84 116 1995-96
1984-85 125 1996-97
1985-86 133 1997-98
1986-87 140 1998-99
1987-88 150 1999-00
1988-89 161 2000-01
1989-90 172 2001-02
1990-91 182 2002-03
1991-92 199 2003-04
1992-93 223 2004-05
 Case – A: (Reference date: 1st April, 2019)
ember 2002. He is an engineer by profession and is part of project team that manages oil rigs worldwide. He has to tour
e has approached you, a CFPCM practitioner, for preparing his Financial Plan. He is staying in his own house at Vadodara. His wife
n Prateek aged 4 years, and a year old daughter Aslia. The family’s monthly house hold expenses are Rs. 40,000 p.m. (excludes
Bikaner. His father is engaged in a small business. Ashwin however supports his parents financially to the extent of Rs. 10,000

Case Study: Case Study:

2nd Apr 2013 1st Apr 2019

34 34
31 31
4 3
1 1
80 80
82 82
40000 70000
FY2013-2014 FY2019-2020
48000 60000
50% 50%
12000 15000
4000 7500
1250 NA
5000 7500
12% 12%
FY2013-2014 FY2019-2020
30000 40000
30% 30%
8000 10000
800 3000
7500 7500
12% 10%

31-Mar-12 31-Mar-19

3500000 7500000
350000 350000
NA 1469000
NA 282000
290000 620000 (account matures on 1st Apr 2026)
400000 400000 ^2 Ashwin purchased the 20 year policy on 18th November, 2012; annual premium Rs. 26,864; 2
2000000 2000000 ^3 Purchased by Ashwin on the life of Prateek on his 3rd birthday for a term of 20 years; annual
650000 650000
NA 290000 ^4 Sumedha purchased 100 units @Rs.3,150 in September 2016 Series, maturity date 30th Sep,
507000 1187000 ^5 Four schemes out of which one is diversified large cap growth fund (Rs. 5.71 lakh), one is mid
328000 328000
 173000 767000 ^6 Two schemes, one is short term debt fund in Growth option (current value Rs. 2.59 lakh) acqu
632000 1832000
250000 0
75000 225000

1297000 1540000 ^7 Home loan of Rs. 20 lakh taken on 1st November, 2013 to acquire a house of 1050 sq.ft. built
293000 267000 ^8 Car loan of Rs. 5 lakh taken on 1st April, 2017 at a fixed interest of 11% p.a. for a 4-year term.

equired for each at their 1. To provide for higher education of Prateek and Aslia. The expenses, at current cost, required for
each child for 4 years; Rs. 8 lakh at their respective age of 18, and Rs. 3 lakh p.a. for 3 subsequent
years; cost escalation 8% p.a.

of 27 years. 2. Marriage expenses of Rs. 18 lakh (current cost) for each child at their respective age of 27 years;
cost escalation for such expenses is 7% p.a.

ed life time. 3. Retirement corpus when Ashwin completes 60 years of age; to sustain the same lifestyle till their
expected life time.

4. A bigger house 3 years from now, valued at Rs. 1.40 crore today; a new car in January 2020 worth
Rs. 10 lakh then.
t cost) to be utilized 10 5. To start building a separate dedicated fund for annual vacation expenses of Rs. 2 lakh (current cost)
to be utilized during 15 years until Ashwin retires; cost escalation 6% p.a.

11% 11.00%
9% 9.50%
7% 7.50%
5.50% 6.00%
7.50% 6.00%
6.50%
7.75%

5.50% 4.50%
6.50% 5%
8% 6.50%

244 2005-06 497 117

259 2006-07 519 122
281 2007-08 551 129
305 2008-09 582 137
331 2009-10 632 148
351 2010-11 711 167
389 2011-12 785 184
406 2012-13 852 200
426 100 2013-14 220
447 105 2014-15 240
463 109 2015-16 254
480 113 2016-17 264
2017-18 272
2018-19 280
2019-20 289
de. He has to tour
house at Vadodara. His wife
Rs. 40,000 p.m. (excludes
the extent of Rs. 10,000

2012; annual premium Rs. 26,864; 20% of sum assured (SA) payable on survival each on expiry of 5th, 10th and 15th years and 40% of SA
thday for a term of 20 years; annual premium Rs. 44,347

2016 Series, maturity date 30th Sep, 2024, coupon @2.75% p.a. payable on half yearly basis on 30th March and 30th September every yea
owth fund (Rs. 5.71 lakh), one is mid & small cap fund (Rs. 3.83 lakh), and two are sector specific funds on Banking (Rs. 1.26 lakh) and Info
on (current value Rs. 2.59 lakh) acquired by Sumedha through Rs. 10,000 monthly SIP continued for 2 years, the last SIP on March 1, 2019

o acquire a house of 1050 sq.ft. built up area valued at Rs. 40 lakh then. Loan details: fixed interest of 8% p.a., tenure 15 years, first EMI pa
nterest of 11% p.a. for a 4-year term. First EMI paid on 1st April, 2017.

urrent cost, required for

h p.a. for 3 subsequent

spective age of 27 years;

he same lifestyle till their

car in January 2020 worth

s of Rs. 2 lakh (current cost)

and 15th years and 40% of SA payable with accrued bonuses on survival of the term

nd 30th September every year

anking (Rs. 1.26 lakh) and Information Technology (Rs.1.07 lakh)
the last SIP on March 1, 2019; the other is Gilt fund subscribed by Ashwin in New Fund Offering (May 20, 2016) for Rs. 2 lakh in Growth op

., tenure 15 years, first EMI paid on 1st December, 2013. Loan shared in 60:40 ratio, major share by Ashwin
r Rs. 2 lakh in Growth option with further contributions of Rs. 1 lakh each on Feb 11, 2017 and on June 17, 2018
14) For their proposed bigger house a year from now Ashwin & Sumedha wouldd require rs.10 lacs towards down payme
FMP which is expected to give post-tax returns of 6.8% when opted for div-reinvestment. Further a certain amount is to
post tax effectively. The dividends received at maturity of quarter Q1, Q2 & Q3 are rolled over along with fresh investme

A) 240289 B) 244197 C) 238661 D) 177943

Soln: (C.)
The goal amount after 1 year is 1000000 1
For a bigger house, required down payment amount: 1000000
Invest 2.5lacs immediately in an Annual FMP, returns 6.8% 250000 6.80%
Also invest via SIP in an Quaterly FMP , generate return 4. 4.80%
The dividends received at maturity of quarter Q1, Q2 & Q3 are rolled over along with fresh investment in the qu
The future vale of annual FMP will be $267,000.00
So the differential goal amount is: $733,000.00
This has to be achieved by investing a certain amount in beginning of q2, q3 qnd q4 yielding 4.8% effectivly
Nominal Compounding rate of Quaterly FMP (Dividend Rein 4.72% 1.179%
To achieve the Target Quaterly SIP amount would be: ($238,661.40)
10 lacs towards down payment & certain statutory exp . You advice them to invest Rs.2.5 lacs immediately in an Annual
rther a certain amount is to be invested every quarter in Quarterly FMP, which is assumed to give a return of 4.8% p.a.
er along with fresh investment in the quarterly FMP. What amount needs to be invested every Quarter ?

(opted for div-reinvestment)

h fresh investment in the quarterly FMP.

yielding 4.8% effectivly

14) For their proposed bigger house a year from now Ashwin & Sumedha wouldd require rs.10 lacs towards down payme
FMP which is expected to give post-tax returns of 6.8% when opted for div-reinvestment. Further a certain amount is to
post tax effectively. The dividends received at maturity of quarter Q1, Q2 & Q3 are rolled over along with fresh investme

A) 240289 B) 244197 C) 238661 D) 177943

Soln: (C.)
The goal amount after 1 year is 1000000 1
For a bigger house, required down payment amount: 1000000
Invest 2.5lacs immediately in an Annual FMP, returns 6.8% 250000 6.80%
Also invest via SIP in an Quaterly FMP , generate return 4. 4.80%
The dividends received at maturity of quarter Q1, Q2 & Q3 are rolled over along with fresh investment in the qu
The future vale of annual FMP will be $267,000.00
So the differential goal amount is: $733,000.00
This has to be achieved by investing a certain amount in beginning of q2, q3 qnd q4 yielding 4.8% effectivly
Nominal Compounding rate of Quaterly FMP (Dividend Rein 4.72% 1.179%
To achieve the Target Quaterly SIP amount would be: ($238,661.40)
10 lacs towards down payment & certain statutory exp . You advice them to invest Rs.2.5 lacs immediately in an Annual
rther a certain amount is to be invested every quarter in Quarterly FMP, which is assumed to give a return of 4.8% p.a.
er along with fresh investment in the quarterly FMP. What amount needs to be invested every Quarter ?

(opted for div-reinvestment)

h fresh investment in the quarterly FMP.

yielding 4.8% effectivly

17) What is the retirement corpus required to be accumulated by Ashwin if he wants to maintain his present life style till
invested in risk free investments to provide the monthly inflation adjusted annuities. You calculate the same to be……

A) 39117347 B) 40086606 C) 35021500 D) 41256700

Soln:(A)

Ashwin Agarwal Current Age

Wife Sumedha Current Age:
Ashwin’s expected life : 80 years
Sumedha’s expected life : 82 years
The family’s monthly house hold expenses are Rs. 40,000 p.m.
Retirement Age of Ashwin:
Inflation : 5.50% p.a.
Risk free rate : 6.50% p.a.
Inflation adjusted return:
Retirement Corpus Duration for Ashwin Life expectancy:
Additional year of life expectancy for Sumedha:
At the time of retirement Age 60 Monthly expenses would be:
Monthly expenses 50% thereafter till Sumedha’s life expectancy.
Retirement Corpus at Age 60 is required For First 20years:
Retirement Corpus at Age 60 is required For Next 5years:
Total Retirement Corpus:
if he wants to maintain his present life style till his expected life time and 50% thereafter till Sumedha’s life expectancy. Such corpus w
d annuities. You calculate the same to be……

34
31
80
82
40000
60
5.50% 0.4472%
6.50% 0.5262%
0.9479% 0.07865%
20
5
160925
234770
35,211,005
3906343
39,117,348
xpectancy. Such corpus will be
17) What is the retirement corpus required to be accumulated by Ashwin if he wants to maintain his present life style till
invested in risk free investments to provide the monthly inflation adjusted annuities. You calculate the same to be……

Ashwin Agarwal Current Age

Wife Sumedha Current Age:
Ashwin’s expected life : 80 years
Sumedha’s expected life : 82 years
The family’s monthly house hold expenses are Rs. 70,000 p.m.
Retirement Age of Ashwin:
Inflation : 4.50% p.a.
Risk free rate : 5.0% p.a.
Inflation adjusted return:
Retirement Corpus Duration for Ashwin Life expectancy:
Additional year of life expectancy for Sumedha:
At the time of retirement Age 60 Monthly expenses would be:
Monthly expenses 50% thereafter till Sumedha’s life expectancy.
Retirement Corpus at Age 60 is required For First 20years:
Retirement Corpus at Age 60 is required For Next 5years:
Total Retirement Corpus:
if he wants to maintain his present life style till his expected life time and 50% thereafter till Sumedha’s life expectancy. Such corpus w
d annuities. You calculate the same to be……

34
31
80
82
70000
60
4.50% 0.3675%
5.00% 0.4074%
0.4785% 0.03979%
20
5
219848
265105
50,333,140
5925116
56,258,256
xpectancy. Such corpus will be
15) Ashwin and Sumedha are able to accumulate rs 3 crore from statuary saving and income collectively at Ashwin’s retire
present household expenses by 20% post-retirement. Ashwin wants to know the annual effective rate at which the corpus
time.

A) 7.64% B) 6.73% C) 7.76% D) 10%

Soln: (C.)
Ashwin Agarwal Current Age
Wife Sumedha Current Age:
Ashwin’s expected life : 80 years
Sumedha’s expected life : 82 years
The family’s monthly house hold expenses are Rs. 40,000 p.m.
Retirement Age of Ashwin:
Inflation : 5.50% p.a.
Ashwin and Sumedha are able to accumulate rs 3 crore from statuary saving at age 60
Curtail the post-retirement expense by 20%:
Calculate Annual Effetive rate (Inflation Linked)?
Post retirement Tenure based on Sumedha's life time:
Annual house hold expense at retirement time:
Post retirement annual expenses will be curtailed 20%, so annual expenses:
Monthly Inflation Adjusted Rate by which the Corpus to be invested so it would be suffic
Monthly Effective rate will be:
Annual Effective Rate:
 ome collectively at Ashwin’s retirement at the age of 60. They further evaluate that they would be able to curtail their
l effective rate at which the corpus should be invested to generate inflation linked monthly income till Sumedha’s life

34
31
80
82
40000
60
5.50% 0.4472%
30000000
20%

25
160925.16
128740.13
0.177%
0.62%
7.762%
15) Ashwin and Sumedha are able to accumulate rs 3 crore from statuary saving and income collectively at Ashwin’s retire
present household expenses by 20% post-retirement. Ashwin wants to know the annual effective rate at which the corpus
time.

A) 7.64% B) 6.73% C) 7.76% D) 10%

Soln: (C.)
Ashwin Agarwal Current Age
Wife Sumedha Current Age:
Ashwin’s expected life : 80 years
Sumedha’s expected life : 82 years
The family’s monthly house hold expenses are Rs. 70000 p.m.
Retirement Age of Ashwin:
Inflation : 4.50% p.a.
Ashwin and Sumedha are able to accumulate rs 3 crore from statuary saving at age 60
Curtail the post-retirement expense by 20%:
Calculate Annual Effetive rate (Inflation Linked)?
Post retirement Tenure based on Sumedha's life time:
Annual house hold expense at retirement time:
Post retirement annual expenses will be curtailed 20%, so annual expenses:
Monthly Inflation Adjusted Rate by which the Corpus to be invested so it would be suffic
Monthly Effective rate will be:
Annual Effective Rate:
 ome collectively at Ashwin’s retirement at the age of 60. They further evaluate that they would be able to curtail their
l effective rate at which the corpus should be invested to generate inflation linked monthly income till Sumedha’s life

34
31
80
82
70000
60
4.50% 0.3675%
30000000
20%

25
219847.53
175878.02
0.423%
0.79%
9.924%
13) Ashwin wants to accumulate additional corpus of 1.5 crore apart from the maturity of his investments in order to maintain
on a monthly basis beginning today certain amount in an equity MF scheme and half of that amount in an assured return sche

A) 7529 in equity MF and 3764 in Assured return scheme

B) 7880 in equity MF and 3940 in Assured return scheme
C) 9704 in equity MF and 4852 in Assured return scheme
D) 11293 in equity MF and 5646 in Assured return scheme
Soln: (A)
Ashwin Agarwal Current Age 34
Retirement Age: 60
Equity & Equity MF schemes /Index ETFs : 11.00% p.a. 11%
an assured return scheme yielding 6% post-tax 6%

Accumulate additional corpus of 1.5 Cr at Retirement: 15000000

SIP (today) monthly basis in Equity MF, Assumed: 100 100
SIP (today) monthly basis in Assured return scheme, Assumed: half of the f 50
Total Corpus accumulate by SIPs: 199,242
To achieve 1.5Crore Corpus, the multiplier will be: 75.29

So SIP (today) monthly basis in Equity MF would be: 7,529

So SIP (today) monthly basis in Assured return scheme, Assumed: half of t 3,764
ments in order to maintain his present lifestyle post-retirement. You suggest him to invest
in an assured return scheme yielding 6% post-tax. You calculate such SIP as _____.

0.8735%
0.4868%
13) Ashwin wants to accumulate additional corpus of 1.5 crore apart from the maturity of his investments in order to maintain
on a monthly basis beginning today certain amount in an equity MF scheme and half of that amount in an assured return sche

A) 7529 in equity MF and 3764 in Assured return scheme

B) 7880 in equity MF and 3940 in Assured return scheme
C) 9704 in equity MF and 4852 in Assured return scheme
D) 11293 in equity MF and 5646 in Assured return scheme
Soln: (A)
Ashwin Agarwal Current Age 34
Retirement Age: 60
Equity & Equity MF schemes /Index ETFs : 11.00% p.a. 11%
an assured return scheme yielding 6% post-tax 6%

Accumulate additional corpus of 1.5 Cr at Retirement: 15000000

SIP (today) monthly basis in Equity MF, Assumed: 100 100
SIP (today) monthly basis in Assured return scheme, Assumed: half of the f 50
Total Corpus accumulate by SIPs: 199,242
To achieve 1.5Crore Corpus, the multiplier will be: 75.29

So SIP (today) monthly basis in Equity MF would be: 7,529

So SIP (today) monthly basis in Assured return scheme, Assumed: half of t 3,764
ments in order to maintain his present lifestyle post-retirement. You suggest him to invest
in an assured return scheme yielding 6% post-tax. You calculate such SIP as _____.

0.8735%
0.4868%
1) Ashwin has heard that a CFPCM practitioner is able to take care of the execution of all aspects of his Financial Plan, viz. In
etc. He confirms with you the same. You advise him that:
A) This is not true about all CFPCM practitioners. The scope and limitation of the services of a CFPCM practitioner need to be d
B) A CFPCM practitioner can never be believed to take care of all aspects of a Financial Plan.
C) This is the right assumption which can be made about all CFPCM professionals.
D) A CFPCM practitioner can make a financial plan, various aspects of which need to be executed by experts in their respective
Soln: (A)
2) Ashwin wants to invest in ULIP, but he wants to be cautious before entering a long period of contract. As Per IRDA Guide
What amount would be refunded to him?
A) He would get the prevailing fund value subject to deduction of expenses towards medical examination, stamp duty and pro
B) He would get the refund of full premium paid.
C) He would get the refund of premium less commission paid to the intermediary.
D) He would get the prevailing fund value less commission paid to the intermediary.
Soln: (A)

4) Before finalising complete financial planning for Ashwin, you felt that Ashwin should have cover atleast to the extent of l
A) Property insurance of 35 lakhs, No car insurance and 25 lakhs of term insurance
B) Property insurance of 17.58 lakh, comprehensive car insurance of 3.50 lakhs and Term insurance of 15.90 lakhs
C) Property insurance of 26.03 lakh, 2.93 lakh of car insurance and 20 lakh of endowment as he has limited liabilities.
D) Property insurance of 12.97 lakh and comprehensive car insurance mortgage insurance of 2.93 lakhs.
Soln: (B)
5) You have suggested an investment strategy which aims to invest more when the share price or NAV falls and less when th
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
D) Weighted Averaging
Soln: (A)
6) Aswin has received few gifts in the financial year 2010-11 and he wants to know about the taxation of the same. He recei
gift of jewelry from his neighbor on 8th November, 2010 which the neighbor bought earlier for Rs. 24,000 whereas the fair m
amount from the above receipts on which Aswin will have to pay tax.
A) The whole amount of Rs. 77,000, as the aggregate value of gifts as money or any property received from one person or mor
B) Nothing is taxable as the aggregate value of money does not exceed Rs. 50,000.
C) Rs. 24,000, as the amount received over the limit of Rs. 50,000 is taxable.
D) Rs. 27,000, as the total amount in excess of the limit Rs. 50,000 is taxable.

Soln: (A)

7) Ashwin purchased 7,000 Units of Equity Mutual Fund @Rs. 50 per unit on 2nd April 2010. The Equity Mutual Fund declare
2010. Ashwin sells 3,000 units on 5th January 2011 at Rs. 42 per unit. How much capital loss Ashwin can claim for the asses
A) He cannot claim any Short Term Loss for Tax computation.
B) He can claim loss of Rs. 24,000 for AY-2011-12 only.
C) He gets Short Term Capital Gains of Rs. 6,000
D) 24,000
Soln: (A)
Since both the conditions ie the purchase is within three months of record date and the sale is within nine months of dividend
received.

8) Ashwini saw the acronym CFPCM against your name in your business card. He wants to know about the same. You tell hi
A) CFP marks are owned outside the US by US based FPSB Ltd and it has given license to FPSB India.
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
Soln: (C)

16) Mr X a CFP wanted to impress Ashwin with his advisory skills. To demonstrate this he passed on the details of another c
A) Integrity
B) Professionalism
C) Confidentiality

Soln: (C.)

19) Ashwin wants to purchase a Child Plan from a Life Insurance company to meet Himanshu’s educational needs. He wants to
would hamper his income pursuits, by what means can the policy be kept in force without payment of further premium but re
A) Payor Rider
B) Dreaded Disease Rider
C) Living Benefit Rider
D) Survivor Purchase Option Rider
Soln: (A)
cts of his Financial Plan, viz. Investments, Insurance, Tax Planning, Estate Planning, Retirement solutions,

PCM practitioner need to be disclosed in writing by him/her in the beginning itself.

d by experts in their respective fields.

f contract. As Per IRDA Guidelines on ULIP, if he wants to return the policy within 15 days free look period.

mination, stamp duty and proportionate risk premium for the period of cover.

over atleast to the extent of liabilities. What you will advise from the following .

nce of 15.90 lakhs

has limited liabilities.

or NAV falls and less when the share price or NAV rises. It is done by achieving the total targeted value of
cating a technique known as _________.

axation of the same. He received a cash gift of Rs. 50,000 on 1st November, 2010 from a friend, and another
Rs. 24,000 whereas the fair market value was Rs. 27,000. He wants to know, what is the total taxable

eived from one person or more than one person exceeds Rs. 50,000.

he Equity Mutual Fund declares a dividend of Rs. 10 per unit. The record date for the dividend was 15th June
shwin can claim for the assessment year 2011-12.
Units Price/Unit Date
7000 50 2-Apr-10
Dividend Record Date: 15-Jun-10
3000 42 5-Jan-11
within nine months of dividend record date, he cannot claim short term capital loss to the extent of dividend

w about the same. You tell him that ________.

ed on the details of another client to Ashwin. He flouted the _______________ rule of Code of ethics.

ducational needs. He wants to know, if he gets permanent physical disabled due to accident which
ent of further premium but retaining intended benefits. You advise _________.
3)Ashwin has not taken any type of insurance on the house property he possesses. The house was purchased in Novemb
construction was Rs. 9 lakh each, whereas other costs were Rs. 1.20 lakh. The cost of construction has increased by 11%
the area where his house is located. You advise him to take an insurance for his house on reinstatement basis to the ext

A) Rs. 17.58 lakh

B) Rs. 37.50 lakh
C) Rs. 35.00 lakh
D) Rs. 26.03 lakh
Soln: (A)
The construction cost in Nov 2004 was 900000 900000
the insurance can be taken only for cost of construction
the cost of construction in April 2011 ie after 77 months is $1,758,187
was purchased in November, 2004 for a total cost of Rs. 19.20 lakh, of which the cost of land and
on has increased by 11% year-on year and the land prices have increased at a CAGR of 18% in
atement basis to the extent of _________.
9) Ashwini want to buy the new house at the proposed time by selling the present house. He will make Rs. 20 lakhs as d
loan and will avail a new loan for tenure of 20 years with 10% pa on a monthly reducing balance basis. He wants to know

A) 48444
B) 43426
C) 46875
D) 40441
Soln: (A)
Current cost of the house 6500000
The value of the house 1 year from now 7,020,000
2000000 will be self contribution 2000000
The loan amount would be: 5,020,000

The emi on the above loan for 20 years at interest rate of 10% $48,444.09
will make Rs. 20 lakhs as down payment from the sale proceeds net of taxes and outstanding
e basis. He wants to know what will be the EMI on the new Loan.
9) Ashwini want to buy the new house at the proposed time by selling the present house. He will make Rs. 20 lakhs as d
loan and will avail a new loan for tenure of 20 years with 10% pa on a monthly reducing balance basis. He wants to know

A) 124724
B) 123426
C) 126875
D) 120441
Soln: (A)
A bigger house 3 years from now, valued at Rs. 1.40 crore today;
Real Estate appreciation : 6.50% p.a. 6.50%
Current cost of the house 14000000
The value of the house 3year from now 16,911,295
20lacs will be self contribution 2000000
The loan amount would be: 14,911,295

The emi on the above loan for 20 years at interest rate of 8% $124,724.04
will make Rs. 20 lakhs as down payment from the sale proceeds net of taxes and outstanding
e basis. He wants to know what will be the EMI on the new Loan.
10) To meet the education expenses of Prateek and Aslia, You advice Ashwin to withdraw one third of the outstanding b
of the outstanding at the end of the 12th year and the balance at the end of the end of the 14th year and invest the sam
today in a balanced MF scheme. Such SIP to be continued till the first withdrawal for Prateek at which time the outstan
withdrawals for the education expenses to be made from the liquid MF scheme at the beginning of the year. What is th

A) 3331
B) 7428
C) 6680
D) 5938
Soln: (C.)

Pratik year Alisa cumulativeinflated 632000 Liquid mf

1 701520
2 778687
3 864343
4 959420
5 1064957
6 1182102
7 1312133
8 1456468
9 1616679
10 1794514 598171.4
11 1327940
12 1474014 737006.9
13 pv 818078
300000 14 300000 634827 634827 908066 908066
200000 15 200000 446495 423218
200000 16 200000 471053 423218
200000 17 300000 500000 1242401 1058046
200000 18 200000 400000 1048587 846437
19 200000 200000 553129 423218
20 200000 200000 583551 423218
21 200000 200000 615647 423218
4655401 he will be able to accumulate 2224687.51 afte
npv of expenses at pratiks age o thus the shortfall to be generated form balanc

shortfall 2185998 balanced monthly compd rate

monthly sip required in balmf for 14 years 9% 0.720732

sip amt $6,680

hdraw one third of the outstanding balance from their portfolio of equity shares at the end of the 10 th year, half
d of the 14th year and invest the same in a liquid MF scheme. You further advice him to start a SIP starting from
r Prateek at which time the outstanding balance to be transferred to the liquid MF scheme started earlier. All
he beginning of the year. What is the amount of such SIP.

fv of liquid fund
$741,029.42

$820,307.13

908066
$2,469,402.79

able to accumulate 2224687.51 after 14 years

hortfall to be generated form balanced mf $2,185,998.43
10) To meet the education expenses of Prateek and Aslia, You advice Ashwin to withdraw one third of the outstanding b
at the end of the 12th year and the balance at the end of the end of the 14th year and invest the same in a liquid MF sch
SIP to be continued till the first withdrawal for Prateek at which time the outstanding balance to be transferred to the l
the liquid MF scheme at the beginning of the year. What is the amount of such SIP.

A) 3331
B) 7428
C) 6680
D) 5938
Soln: (C.)
To provide for higher education of Prateek and Aslia. The expenses, at current cost, required for each at their respective a
years, Rs. 2 lakh p.a.

Inflation rate: 5.50%

Equity & Equity MF schemes /Index ETFs : 11.00% p.a. 11.00%
Balanced MF schemes : 9.00% p.a. 9.00%
Liquid MF schemes : 5.50% p.a. 5.50%
You advice Ashwin to withdraw one third of the outstanding balance from their portfolio of equity shares at the end of the
end of the 14th year and invest the same in a liquid MF scheme.
Son - Prateek Current Age: 4 18 Education expense at current
Daughter - Aslia Current Age: 1 18 1
2
Years 3
1 Aslia Born 4
2 5
3
4 Prateek Born
5
6
7
8
9
10
11
12
13
14
15
16
17 PV on 14th year
0 18 Prateek 1year (14th year from now) education ex 634827 634827
1 19 Prateek 2year education expense at age 19: 446495 423218
2 20 Prateek 3year education expense at age 20: 471053 423218
3 21 Prateek 4year education expense at age 21: 496960 423218 18
4 22 Prateek 5year education expense at age 22: 524293 423218 19
 5 23 20
6 24 21
7 25 22

Total PV at 14th year from Prateek and Aslia: 4655401

You advice Ashwin to withdraw one third of the outstanding balance from their portfolio of equity shares at the
balance at the end of the end of the 14th year and invest the same in a liquid MF scheme.

Portfolio of Equity Shares : Rs. 6.32 lakh 632000

At 10th year value of Equity Shares: 1794514
0.33 1/3rd Value of Equity Shares on 10th year Age: 598,171
Equity Shares Value (Remaining part) at 12th Year Age: 1,474,014
0.5 1/2 of the outstanding at the end of the 12th year Age: 737,007
Equity Shares Value (Remaining part) at 14th Year Age: 908,066

Value of investment in Liquid fund from the Equity Shares Withdrawal 2,469,403

Remaining (Outstanding) Balance for education Fee: 2,185,998

Started SIP now in Balanced Mutual fund to achieve the Outstanding amount till 14th year (6,680)
 third of the outstanding balance from their portfolio of equity shares at the end of the 10 th year, half of the outstanding
he same in a liquid MF scheme. You further advice him to start a SIP starting from today in a balanced MF scheme. Such
to be transferred to the liquid MF scheme started earlier. All withdrawals for the education expenses to be made from

each at their respective age of 18 years, are Rs. 3 lakh and for 4 subsequent

ty shares at the end of the 10th year, half of the outstanding at the end of the 12th year and the balance at the end of the

ation expense at current cost (Yearly):

300000
200000
200000
200000
200000

Pv on 14th year

Aslia 1st yr(17yr from now) edu. Exp.at age 18: 745441 634827.4
Aslia 2nd yr(18Yrs from now) edu. Exp. at age 19: 524293 423218.3
 Aslia 3rd yr(19Yrs from now) edu. Exp. at age 20: 553129 423218.3
Aslia 4th yr(20Yrs from now) edu. Exp. at age 21: 583551 423218.3
Aslia 5th yr(21Yrs from now) edu. Exp. at age 22: 615647 423218.3

olio of equity shares at the end of the 10th year, half of the outstanding at the end of the 12th year and the
eme.

Inflation rate: 5.50%

Equity & Equity MF schemes /Index ETFs : 11.00% p.a. 11.00%
Balanced MF schemes : 9.00% p.a. 9.00%
Liquid MF schemes : 5.50% p.a. 5.50%
0.721%
10) To meet the education expenses of Prateek and Aslia, You advice Ashwin to withdraw one third of the outstanding b
end of the 12th year and the balance at the end of the end of the 14th year and invest the same in a liquid MF scheme.
continued till the first withdrawal for Prateek at which time the outstanding balance to be transferred to the liquid MF
scheme at the beginning of the year. What is the amount of such SIP.

A) 3331
B) 7428
C) 6680
D) 5938
Soln: (C.)
1. To provide for higher education of Prateek and Aslia. The expenses, at current cost, required for each child for 4 years;
3 subsequent years; cost escalation 8% p.a.

Cost escalation: 8.00%

Equity & Equity MF schemes /Index ETFs : 11.00% p.a. 11.00%
Balanced MF schemes : 9.50% p.a. 9.50%
Liquid MF schemes : 6.0% p.a. 6.00%
You advice Ashwin to withdraw one third of the outstanding balance from their portfolio of equity shares at the end of the
the 14th year and invest the same in a liquid MF scheme.
Son - Prateek Current Age: 4 18
Daughter - Aslia Current Age: 1 18

Years
1 Aslia Born
2
3
4 Prateek Born
5
6
7
8
9
10
11
12
13
14
15
16
17 PV on 14th year
0 18 Prateek 1year (14th year from now) education expense 2349755 2349755
1 19 Prateek 2year education expense at age 19: 951651 881158
2 20 Prateek 3year education expense at age 20: 1027783 881158
3 21 Prateek 4year education expense at age 21: 1110005 881158
4 22
 5 23
6 24
7 25

Total PV at 14th year from Prateek and Aslia:

You advice Ashwin to withdraw one third of the outstanding balance from their portfolio of equity shares at the
the end of the end of the 14th year and invest the same in a liquid MF scheme.

Portfolio of Equity Shares : Rs. 18.32 lakh

At 10th year value of Equity Shares:
0.33 1/3rd Value of Equity Shares on 10th year Age:
Equity Shares Value (Remaining part) at 12th Year Age:
0.5 1/2 of the outstanding at the end of the 12th year Age:
Equity Shares Value (Remaining part) at 14th Year Age:

Value of investment in Liquid fund from the Equity Shares Withdrawal:

Remaining (Outstanding) Balance for education Fee:

Started SIP now in Balanced Mutual fund to achieve the Outstanding amount till 14th year Age=
draw one third of the outstanding balance from their portfolio of equity shares at the end of the 10 th year, half of the outstanding at the
t the same in a liquid MF scheme. You further advice him to start a SIP starting from today in a balanced MF scheme. Such SIP to be
to be transferred to the liquid MF scheme started earlier. All withdrawals for the education expenses to be made from the liquid MF

required for each child for 4 years; Rs. 8 lakh at their respective age of 18, and Rs. 3 lakh p.a. for

io of equity shares at the end of the 10th year, half of the outstanding at the end of the 12th year and the balance at the end of the end o

Education expense at current cost (Yearly):

1 800000
2 300000
3 300000
4 300000
5 0

PV on 14th year Pv on 14th year

18 Aslia 1st yr(17yr from now) edu. Exp.at age 18: 2960014 2349755
19 Aslia 2nd yr(18Yrs from now) edu. Exp. at age 19: 1198806 881158.1
 20 Aslia 3rd yr(19Yrs from now) edu. Exp. at age 20: 1294710 881158.1
21 Aslia 4th yr(20Yrs from now) edu. Exp. at age 21: 1398287 881158.1

9986458
heir portfolio of equity shares at the end of the 10th year, half of the outstanding at the end of the 12th year and the balance at
me.

1832000 Cost escalation:

5201819 Equity & Equity MF schemes /Index ETFs : 11.00% p.a.
1,733,940 Balanced MF schemes : 9.50% p.a.
4,272,774 Liquid MF schemes : 5.50% p.a.
2,136,387
2,632,243

7,221,746

2,764,712

(8,128)
 half of the outstanding at the
MF scheme. Such SIP to be
e made from the liquid MF

alance at the end of the end of

r and the balance at

8.00%
: 11.00% p.a. 11.00%
9.50% 0.759%
6.00%
11) For the marriage expenses of Prateek and Aslia, you advice Ashiwn and Sumedha to start a SIP immediately in an Equity In
outstanding market value be redeemed at the end of the 18th year and every year end thereafter till its full redemption on Pra
MF scheme and withdrawn for respective marriages. The amount of such SIP is.
A) 11428
B) 7200
c) 4992
D) 6714
Soln: (A)

prateek is currently aged 4 years marriage expences are required at the age of 27 ie after 23 years and that for Alisa will be req
Start a SIP in equity index fund for a period of 17 years then at the end of 18th year i/3 of the amount is withdrawn and invest
and final redemption at the time of Pratik's marriages.
the present cost of marriage is 1500000
the cost of Prateek's marriage after 23 year5139227.351525
the cost of Alisa's marriage after 26 years w6034693.391693
discounted cost of Alisa's marrige at the time of Prateek's m 5139227
the total amount required in Liquid MF at the time of Prateek's marriag 10278455

now assuming we start a sip of rs 100 the working would be as follows eff rate of equity
monthly compunding rate
the fv os rs 100 sip for 17 years will be $56,532.10
this will further grow in euity for 1 year $62,750.63

year equity portequity liquid mf equity growth liquid mf growth

19 62751 41834 20917 46435 22067
20 46435 30957 37546 34362 39611
21 34362 22908 51065 25428 53873
22 25428 16952 62349 18817 65779
23 18817 12545 72051 13924 76014 total portfolio
so a 100 rs sip achieves 89938.17
to achieve 10278454.7 we need to invest 11428
t a SIP immediately in an Equity Index MF for 17 years, then redeem in such a way that one third of the
eafter till its full redemption on Prateeks Marriage. The funds so redeemed should be invested in a liquid

years and that for Alisa will be requied after 26 years

e amount is withdrawn and invested in liquid mf and the same procedure followed for the next 4 years

11%
ompunding rate 0.873459

89938.17
12) Sumedha had started investing in the debt mutual fund scheme three years back i.e. 1.4.2007 an amount of Rs 12000 by
on her investment. You calculate the same to be ______.

A) 7.4%
B) 5.58%
c) 5.31%
D) 5.45%
Soln: (C.)
The total time frame in this case is 48 months, ie first 12 months with investment of 12000 and then 36 months wit
this can be done in cash flow or in excel as follows
1 -12000
2 -12000
3 -12000
4 -12000
5 -12000
6 -12000
7 -12000
8 -12000
9 -12000
10 -12000
11 -12000
12 -12000
13 0
14 0
15 0
16 0
17 0
18 0
19 0
20 0
21 0
22 0
23 0
24 0
25 0
26 0
27 0
28 0
29 0
30 0
31 0
32 0
33 0
34 0
35 0
36 0
37 0
38 0
39 0
40 0
41 0
42 0
43 0
44 0
45 0
46 0
47 0
48 0
49 173000
0.43238% this is the monthly IRR, annual = 0.43238*12 5.19
the effective rate she has earned will be 5.314%
007 an amount of Rs 12000 by way of SIP for a year. She asks you what pre-tax returns she has earned

2000 and then 36 months without investment

12) Sumedha had started investing in Two schemes, one is short term debt fund in Growth option (current value Rs. 2.59
SIP on March 1, 2019; the other is Gilt fund subscribed by Ashwin in New Fund Offering (May 20, 2016) for Rs. 2 lakh in G
2018. She asks you what pre-tax returns she has earned on her investment. You calculate the same to be ______.

Bonds/Govt. Securities/Debt MF schemes : 7.50% p.a.

Liquid MF schemes : 6.00% p.a.
20-May-16 NFO Gilt fund subscribe for amount 2lacs in growth option
11-Feb-17 Further contributed
17-Jun-18 Further contributed
1-Mar-17 2yrs monthly SIP of Rs 10000 in short term debt fund in growth o
1-Apr-19 Current Value of 2yrs monthly SIP of Rs 10000 in short term debt
Return generated by SIP of 10000 investing in short term debt fu
PV of SIP on 1Mar2017
NPER= 2.87 1-Apr-19 value of NFO Gilt Fund:
NPER= 2.13 1-Apr-19 value of Further Contributed-1 in Gilt Fund:
NPER= 0.79 1-Apr-19 value of Further Contributed-1 in Gilt Fund:
Total Value of investment at different time frame and different instruments:

20-May-16 -200000
11-Feb-17 -100000
17-Jun-18 -100000
1-Mar-17 -221398
1-Apr-19 727,621
NFO Gilt fund subscribe for amount 2lacs in growt
Further contributed
Further contributed
PV of SIP on 1Mar2017
Total Value of investment at different time frame

XIRR= 7.61%
 option (current value Rs. 2.59 lakh) acquired by Sumedha through Rs. 10,000 monthly SIP continued for 2 years, the last
y 20, 2016) for Rs. 2 lakh in Growth option with further contributions of Rs. 1 lakh each on Feb 11, 2017 and on June 17,
e same to be ______.

7.50%
6%
n growth option 200000
100000
100000
m debt fund in growth o 10000
000 in short term debt 259000
g in short term debt fu 0.66% 8.16%
221,398
246,059
116,690
105,872
different instruments: 727,621

ibe for amount 2lacs in growth option

ment at different time frame and different instruments:

18) To meet the education expenses of Prateek and Aslia, You advice Ashwin to withdraw one third of the outstanding balance
to do so each year until the entire withdrawal at Aslia’s age 18. The amount thus withdrawn is invested in a liquid MF scheme.
mutual fund and debt mutual fund in the ratio of 75:25 by SIP for the next 14 years and to redeem the amount and invest the
as and when required to be withdrawn from the liquid fund. You calculate the SIP amount to be…….
A) 7650
B) 5550
C) 4829
D) 6230
Soln: (C.)
Pratik year Alisa cumulative inflated 632000
1 701520
2 778687
3 864343
4 959420
5 1064957
6 1182102
7 1312133
8 1456468
9 1616679
10 1794514
11 1991911
12 2211021
13 pv 2454233
300000 14 300000 634827 634827 2724199 908066 1816132
200000 15 200000 446495 423218 2015907 671969 1343938
200000 16 200000 471053 423218 1491771 497257 994514
200000 17 300000 500000 1242401 1058046 1103911 1103911 0
200000 18 200000 400000 1048587 846437 accumulation in Liqui
19 200000 200000 553129 423218
20 200000 200000 583551 423218
21 200000 200000 615647 423218
4655401 he will be able to accumulate 2931871 after 14 years
npv of expenses at pratiks age of 18 thus the shortfall to be generated by way of SIP

rate monthly rate

Equity 11 0.8734593823552
Debt 7 0.5654145387405

Now assume we start a sip of Rs. 100, 75 would be invested in equity and 25 would be invested in debt
FV of equity sip $28,673.54
fv of debt sip $7,019.01
total $35,692.55

thus to get 1723530 we need a sip of 4,829

third of the outstanding balance from their portfolio of equity shares at Prateek’s age of 18 and continue
invested in a liquid MF scheme. You further advice Ashwin to invest in a separate scheme of equity
eem the amount and invest the same in the Liquid MF along with 1/3 of the equity portfolio. All expenses

908066
636937
446762
940106
2931871

cumulate 2931871 after 14 years

be generated by way of SIP 1,723,530

be invested in debt