CWM_LEVEL_2

CWM_LEVEL_2 practice questions, page 3 of 7, with answer review and explanations.

Question 11

What is the present value of an annuity which pays Rs. 10,000 for 3 years at the end of each year, assuming ROI @7% per annum compounded annually?

  1. Rs. 28,080.18
  2. Rs. 26,243.16
  3. Rs. 34,400
  4. Rs. 27,243.54

Question 12

By agreeing to service any assets that are packaged together in the securitization process a bank can

  1. Ensure the assets that are packaged and securitized remain in the package and are not sold off
  2. Choose the best loans to go through the securitization process
  3. Earn added fee income
  4. Liquidate any assets it chooses

Question 13

The Markowitz model identifies the efficient set of portfolios, which offers the

  1. Highest return for any given level of risk or the lowest risk for any given level of return
  2. Least-risk portfolio for a conservative, middle-aged investor
  3. Long-run approach to wealth accumulation for a young investor
  4. Risk-free alternative for risk-averse investors

Question 14

What is a method to evaluate a large volume of consumer loans quickly with minimum labour?

  1. Debt Scoring
  2. Credit Scoring
  3. Credit Process
  4. Debt Consolidation

Question 15

The core of the ____________ is that even though stocks appear to be an attractive asset, they have high average returns and a low covariance with consumption growth investors appear very unwilling to hold them.

  1. Sunk Cost Fallacy
  2. Equity Premium Puzzle
  3. Present-biased Preferences
  4. Inter Temporal Consumption