Free AAFM CWM_LEVEL_2 Questions

Section A (1 Mark) According to the __________________ if irrational traders cause deviations from fundamental value, rational traders will often be powerless to do anything about it.

Section C (4 Mark) Suppose you have a two - security portfolio containing Bonds A and B. The market value of Bond A is Rs. 6,000, and the market value of Bond B is Rs4,000. The duration of Bond A is 8.5, and the duration of Bond B is 4.0. Calculate the duration of the portfolio.

Section B (2 Mark) Which of the following statements is/are true?

Section A (1 Mark) The best way to maintain your credit rating is to:

Section B (2 Mark) Mr.Neeraj has a portfolio consisting of two stocks A & B has a standard deviation of 5% while stock B has a standard deviation of 15%. Stock A comprises 40% of the portfolio and stock B consists of 60%. If the correlation of returns of A and B is 0.5, the variance of return on the portfolio is_______