100% Free AAFM CWM_LEVEL_2 Practice Test Questions and Answers 2026

Section B (2 Mark)Reliance Ltd. has issued a preferred stock that pays Rs.10 per share. The dividend is fixed and the stock has no expiration date. What is the intrinsic value of Reliance Ltd. stock, assuming a discount rate of 14%?

Section B (2 Mark)If a portfolio manager has a good ability to select undervalued securities but a poor ability to forecast overall market, the following makes sense for him:

Section B (2 Mark)A bond has a market value of Rs100,000 and a duration of 9.42. What is the price value of a basis point?

Section B (2 Mark)Sunil insured the building of his house for a sum of Rs.500000 against fire insurance. One day the house is totally gutted in a devastating fire. The insurance surveyors certified that the building is a total loss with no salvage value and that the insurable value of the building just prior to the loss was Rs.1000000. The insurer will pay to Sunil:

Section A (1 Mark)An arbitrage opportunity exists if an investor can construct a __________ investment portfolio that will yield a sure profit.