CWM_LEVEL_2 Exam Dumps : Chartered Wealth Manager (CWM) Certification Level II Examination

Section C (4 Mark)

The expected return and standard deviations of stock A & B are:

Amit buys Rs.20,000 of Stock A and sells short Rs.10,000 of Stock B using all the Proceeds to buy more or Stock A. The correlation Between the two securities is .35. What are the expected return & standard deviation of Amit’s portfolio?

Section B (2 Mark)

The risk-free return is 9 percent and the expected return on a market portfolio is 12 percent. If the required return on a stock is 14 percent, what is its beta?

Section C (4 Mark)

Read the senario and answer to the question.

Mrs. Deepika’s brother is impressed with Manav Fashion Ltd. an online clothing firm that focuses on the 18–22 age bracket. Their prices are much lower than their competitors, and the quality is high. Reading about the firm on its web site and in various financial newspapers, her brother has learned that the company plans to expand its clothing lines. The prevailing price of its share is 70 per share. Manav Fashion Ltd. has had recent annual earnings of Rs. 5 per share. Only three other companies have very similar business to Manav Fashion Ltd. and have stock that is traded and there PE ratios are as follows:

Her brother asked Mrs. Deepika to guide him in investing the Manav Fashion Ltd. Getting the query from her brother Mrs. Deepika asks your advice on this matter. As a Chartered Wealth Manager what will be your advice?