## Exam 5, CFP – Updated Sample Case Studies for FY 2013-14

Posted by Prashant Shah on January 28, 2012

Following case studies will be applicable from 1st Feb, 2013. Source: www.fpsbindia.org

Case A: http://www.fpsb.co.in/Upload/CFPSampleQPaper/Case-A.pdf

Case B: http://www.fpsb.co.in/Upload/CFPSampleQPaper/Case-B.pdf

Case C: http://www.fpsb.co.in/Upload/CFPSampleQPaper/Case-C.pdf

Case D: http://www.fpsb.co.in/Upload/CFPSampleQPaper/Case-D.pdf

Case E: http://www.fpsb.co.in/Upload/CFPSampleQPaper/Case-E.pdf

Case F: http://www.fpsb.co.in/Upload/CFPSampleQPaper/Case-F.pdf

## Vinayak said

Dear Prashant,

Just a couple of queries.Based on the feedback you have about the current AFP exams on the cases uploaded, what is the level of difficulty of the questions being asked ? Also I want to know whether the current six cases will continue for sometime or are they likely to change ? I am thinking of giving the AFP exam by the end of this month. The cases on your blog have been very helpful. Your other blog posts have also been very helpful both content wise and exam wise.

Thanks

Vinayak

## Prashant Shah said

Dear Vinayak,

Thanks for the feedback.

Difficulty level in the exam will be moderate but suggest you to solve all the 5 marker questions at the end.

The case studies which are applicable from 1st Feb are applicable for the entire year and are not going to change till 31-jan- 2013.

The exam is for 4 hours and hence there is no time constraint.

Use the timeline to solve the questions and practice all the case studies by solving manually and not by just looking at the solutions.

Feel free to ask any querry.

All the best.

Prashant.

## Vinayak said

Dear Prashant,

Thanks for the practical advice. It’s really useful. I will keep in mind your tip about solving the 5 markers at the end. I am solving the previous case studies. I have a few queries:

1. Do we need to remember the previous rates of the small savings schemes like NSC, KVP PPF POMIS etc. and also the bonus aspect ?

2. The problems are mainly number crunchers but you have to be alert while solving since any wrong step and you are lost. Also one needs to read the question properly and thoroughly and understand correctly else the answer will be wrong. I have been using the financial calculator and am quick and familiar with it. But for some problems like ULIPs and for XIRR, one has to use the spreadsheet. Have not used open office but have been using Excel.

3. I am almost through with the 2009 ( 22 ) and 2010 cases (08). Any more cases available of 2010 or 2011 ? I am finding it very interesting to solve these cases. It gives you a practical insight into the financial planning field and helps you in identifying areas of improvement.

Thanks again for your advice.

Vinayak

## Prashant Shah said

Dear Vinayak,

Thanks for appreciation.

We don’t have to remember the older rates of small savings scheme. And yes, I absolutely agree that you have be alert while solving the questions to get the correct answer otherwise you may get a wrong solution. I also advise you to use amort function on calculator to solve the questions of loans, as it saves a lot of time.

All the best.

Prashant.

## Vinayak said

Dear Prashant,

Just wanted to inform you that I have cleared the Exam 5 ( AFP ) with ‘ A ‘ grade. I wish to thank you and your blog which have been very useful. I have been a regular follower of your blog and will continue to do so in future.You are rendering Yoeman service and i hope many others also benefit by your blog.

Please advise me as to the next step towards getting the CFP certification and accredition from FPSB India. I have more than ten years of work experience ( in non-financial field). I am an engineer by profession. I have done this course because of my interest in the subject of Financial Planning.

Thanks once again.

Vinayak

## Prashant Shah said

Wow! Congratulations.

You will be receiving mail from FPSB regarding the further due diligence.

Regards,

Prashant V Shah

## sachinn kharate said

dear prashant sir

i have some qry about case study which posted on ur blog case ctudy vijay q1 lif insurance ur ans is 109lac but why u r nt deducting his existing ins cover 12 lack q no 8 — retirement benifite 20 lacks( how to calcute this amt ) sir i am giving final exam next 15days. so please guide me for study

sachinn

## Prashant Shah said

Dear Sachin,

Q-1: we are required to calculate the requirement of insurance and not the inremental or additional insurance requirement, hence, there is no need to reduce the existing insurance.

Q-8: 20 lakh is already given in the question.

Prashant.

## Vinayak said

Dear Prashant,

In the Q.No. 8 ( case study Vijay) pertaining to the retirement corpus, I need one clarification. In the notes , it is given that the current expenses are 21000 per month. So to calculate the retirement corpus, I feel we should take the post retirement period expenses on a monthly basis and calculate the corpus required. If we calculate like this, we get a corpus of Rs. 92,12,441. Whereas in the solution provided, the post retirement expenses have been taken on an annual basis. The difference between these two comes to about 2 lakhs. What is your view on this. When monthly expenses are given, why should we calculate on annual basis ? Is there any guideline here which needs to be followed ? As per my calculations, the final answer is a surplus of Rs. 4,61,000.

Thanks

Vinayak

## Prashant Shah said

Dear Vinayak,

Your observation is right. It is always better to take monthly withdrawals post retirement and the same thing has been corrected in the later case studies by FPSB.

Prashant.

## sachinn kharate said

dear prashant

have u made questions on new case study ?? pl post

## Priyanka said

Dear prasanth,

I cleared Exam 5…Thank you so much for Your Help and support.

Regards,

Priyanka

## priyanka said

I also had some queries:

1)I have 2 yrs of experience can i use CFP in my business card?

2)From when do i have to start paying membership dues(my registration expires on June)?

Hoping to hear from you soon.

## Vinayak said

Priyanka,

Congrats!

Can you please share your experience of the exam like which case studies you got and what level of difficulty were the question and any other information about the exam and the questions.

Thanks

Vinayak

## Manish said

Dear vinayak its seems like u clear the investment planning module I would like to hear ur experience for this module as my buddys planning to give the exams of this module so I appreciate if u can post the questions which u remember or anything tricky content if u like to share.

## Vinayak said

Manish,

I had cleared the IP module a couple of months back, hence can’t really recall any questions. From what I remember the questions were not tricky at all. Your basics should be strong and you should remember the formulae. Be alert while solving and you will not go wrong.Special emphasis on Equity Valuation and Sharpe, Treynor, Jenson’s Alpha etc.Also please do the practice questions on Prashant’s blog. They are really useful.

All the best.

Vinayak

## Kavya Joshi said

Hello Sir,

I have my exam on the 30th of June and i wanted to ask you if you have any questions that are currently being asked in the cases (in 2012). I Also, what are the theory topics that i should be extremely familiar with for this exam ( except code of ethics). Also, i am having difficulty in solving small saving scheme questions. Is it possible that i post the questions and you can explain it to me.

## Prashant Shah said

Dear Kavya,

You can post the questions.

Prashant.

## Kavya Joshi said

Q. 1) Ravi invested in shares of XYZ ltd on 12th October 2006 Rs. 3.50 below its Face Value. He received

dividends of Rs. 0.30 per share, Rs. 0.50 per share on 8th December 2007 and 30th November 2008

respectively. If he sells the entire holding of shares at the prevailing market price, what returns would he

have got from this transaction?

Q. 2) Thirukutti has invested in a Debt MF scheme with Dividend Re-investment option. The scheme has just

declared a dividend of 8%. The current value of his Debt MF scheme is as per the Cum-Dividend NAV

of 12.7689. Thirukutti wants to know the total Dividend Distribution Tax that the Scheme will have to

pay on the Dividend Distributed to him? (Please assume that the applicable tax laws are the same as

that of AY 2009-10)

A) Rs. 2,236

B) Rs. 1,789

C) Rs. 1,118

D) Rs. 1,342

Q. 3) You suggest Ravinder to invest Rs. 1 Lakh every year in NSCs beginning from today till Noori completes

15 years of age. The maturity proceed of each NSC is reinvested in Debt Mutual Fund scheme.

Ravinder asks you whether, with the amount thus accumulated, he would be able to achieve the goal

of Nooriâ€™s marriage, or there could be a shortfall in meeting such expenses. (Assume interest rate

offered on NSC remains unchanged throughout the investment period and the return indicated on

Debt Mutual Fund holds from year to year)

A) Shortfall of Rs. 13,92,058

B) Shortfall of Rs. 16,88,400

C) Excess of Rs. 4,99,300

D) Shortfall of Rs. 14,09,740

## Prashant Shah said

Dear Kavya,

You must be having answers of the stated questions hence requst you to specify where u stuck up.

prashant.

## Vinayak said

Dear Kavya,

With permission of Prashant, I shall try to answer your queries:

1. For this , you should use the XIRR function in Excel/open office spreadsheet to solve.

XIRR 15.01%

12-Oct-06 -65000

8-Dec-07 3000

30-Nov-08 5000

20-Mar-10 95000

2. For this problem, first find out the number of units.

Current value of the fund ( as given in the case description) : Rs. 1,26,000

Current NAV : Rs. 12.7689

Therefore no. of units = 126000/ 12.7689 = 9867.7254

Now, dividend declared is 8%, therefore total dividend amount = no. of units X dividend = 9867.7254 X 0.80 = 7894.18

( please remember that the dividend is always calculated on the face value)

Dividend Distribution Tax = 12.50% = 7894.18 X 0.125 = 986.7725

Surcharge = 10%( then rate) = 986.7725 X 0.10 = 98.6773

Edu. cess @ 3% on Basic + surcharge= ( 986.7725+98.6773) X 0.03 = 32.5635

Total = 1118.01

3. For this problem, please remember that at that time, the NSC rate was 8% compounded semi-annually and term was 6 years. Therefore Rs. 100000 invested in NSC becomes Rs.160103 at the end of 6 years.

Age NSC Debt MF

7 100000

8 100000

9 100000

10 100000

11 100000

12 100000

13 100000 160103

14 100000 160103

15 100000 160103

16 160103

17 160103

18 160103

19 160103

20 160103

21 160103

You can use the CASH mode on Calculator to find the NFV at age 21 giving an interest rate of 8% ( Debt MF).

The value will come to Rs. 19,99,295.

Now, calculate the corpus required for marriage= 1500000 X 1.06 ^ 14 = Rs. 33,91,356

Therefore shortfall is Rs. 33,91,356 – Rs. 19,99,295 = Rs. 13,92,061

I hope the above answers your queries and meets with Prashant’s approval.

Thanks

## Vinayak said

In the above solutions, the amounts at ages 16 to 21 should come under the Debt MF column. It was an alignment error.

Vinayak

## Prashant Shah said

Dear Vinayak,

Thank you so much for all the efforts.

Just adding one thing for kavya, which is about net future value function. This function is available only on professional financial calculator and not on the regular financial calculator, if I am not wrong.

Regards,

Prashant.

## Kavya Joshi said

Also, where can i get more case studies for practice especially latest ones? Also, please advise me on theory topics which i need to be extremely aware of. Hoping for a quick reply!

## Prashant Shah said

Dear Kavya,

There are no case studies published by fpsb after april 2010 hence latest stuff is not available anywhere. theory apart from ethics is not predictable and thats the reason why you should have thorough understanding of the first 4 modules.

Regards,

Prashant.

## manish said

dear prashant sir i have one query regarding the certificates of modules.2 mnths ago while filling the registration form of cfp i ‘ve done one mistake,by mistake i click the saluation as ”Dr” instead of “Mr” but i realized this mistake after giving one module of rpeb and i also reveived the same certificate with the salutation “Dr” in front of my name,however i requested the fpsb to change my salutation from dr to mr and they already changed it.Now my query is tht if i cleared the the remaining modules wht will be my salutation?i know i asked the stupid question but this situation keeps confusing me and i am not able to concentrate on my studies bcoz of this problem. waiting for ur reply.

## manish said

dear sir note tht they change the salutation on my personal details of my profile not on my certificate as they already prepared this certificate after tht i realized my mistake.

## Prashant Shah said

Dear Manish,

There is nothing to worry about.

There would be no need to produce independant certificates once you clear final module and hence i think your concern is sorted. As they have changed the salutation, the remaining certificates should have Mr. before your name.

Regards,

Prashant.

## Manish said

Thank u very much sir.

## Manish said

Thnks for ur quick reply also it would be great if u keep visting the blog so everyone will be benefited from it however now I m preparing the insurance after tht planning to give the ip module.

## Manish said

Oops even though I hit the reply button.while replying to vinayak then also my comment is showing at the bottom of the post.

## Chetan Desai said

Prashant Sir,

I just wanted to know what is the Difficulty level of 5 Module.

and what should be the Strategy to solve paper on examination Day.

## Prashant Shah said

Dear Chetan,

Vinayak will explain the rigor as well as the recent trend of the Exam 5. Vinayak has recently cleared the same exam with A grade.

Regards,

Prashant.

## Vinayak said

Thanks Prashant.

Dear Chetan,

The questions are reasonably difficult as is to be expected at this level. Please be thorough with the concepts of all the modules. Mastery over Time Value of Money concepts will be very useful. Solve as many previous cases ( available on this blog) as possible. As Prashant had earlier told me, solve the cases manually and do not just flip through the solutions. This is very good advice.

Regarding strategy during the exam, I suggest you read the cases thoroughly and start with the 2,3 and 4 markers. Solve the five markers at the end. Time will be adequate. Tax planning questions may look easy, but there will be a twist somewhere, so be alert while solving. Read the question twice or thrice and understand what exactly is being asked.

All the Best.

Regards

Vinayak

## Chetan Desai said

Thank You Vinayak and Prashant Sir.

The case Study which are uploaded on this Blog are enough for Practice or Some more case Study i need to Solve.

## Vinayak said

Dear Chetan,

The case studies uploaded on this blog are more than adequate.

Vinayak

## Chetan Desai said

Thank You Vinayak Sir.

## Chetan Desai said

Prashant.Sir or Vinayak Sir.

Can anyone of you Tell me How many question are there for 5 Marks, 4 Marks, 3 Marks and 2 Marks.

Thanks You.

## Vinayak said

Chetan,

As per the information available on FPSB India website, the structure is as follows for each case study:

5 marks – 4 questions

4 marks – 2 questions

3 marks – 4 questions

2 marks – 5 questions

Practically , you can be assured that there will be 4 questions of 5 marks and 2 questions of 4 marks. For the rest, there may might be slight variations.

Chetan, please just address me as Vinayak. I am also a student of Financial Planning just like you.There is only one ‘Sir’ for this blog and that is Prashant.

Best Regards

Vinayak

## Chetan Desai said

Thanks Vinayak.

## Mitul Raval said

To Prashant Sir & Vinayak Sir.

I am doing C.A. And simultaneously doing CFP too. I have cleared 4 modules of CFP. And I am planning to give my final module in next month or so. Sir Can u please tell me that in my exam which PPF, POMIS,NSC & SCSS rates were applicable? I have heard that some rates were changed.

Sir please guide me in this matter. Awaiting for your reply.

## Vinayak said

Dear Mitul Raval,

Prashant sir has answered this question elsewhere on this blog. The current position is as under:

The rates as notified on 01 December 2011 by the Govt. of India for small savings schemes like PPF, POMIS, NSC, SCSS etc.are applicable for the exams. This has been stated by FPSB India vide their notification dated 02 Jan 2012. Also the applicable assessment year is 2012-13. These will be applicable for the CFP exams till further notice.

Hope its clear.

All the best.

Vinayak

## ravalmitul1990 said

Thank you very much sir for your prompt reply.

## sachin said

dear sir, how calculate capital gain on gold coins (long term ) , and gold etf ,and ,, resi. house and also non listed shares if it is possible to give examp. so pl give sachinn

## Prashant Shah said

Dear Vinayak,

Can you please take care of this..

Regards,

Prashant.

## Prashant Shah said

Dear Sachin,

You can see the posts of capital gain to understand the same in detail.

Regards,

Prashant

## sachin said

sir i read it i have ltl confusion if resi. house buy at 15 lac on 2004 sell 60 lack on 2012 what is capital gain ??can we use both option 20% with indextion and 10% without indextion and same under buy back of co. share and off market share….. sachinn

## Vinayak said

Dear Sachin,

For res. house and buy back of shares, you can calculate 20% with indexation and 10% without indexation and take the lesser value for taxation purposes. For off market shares, you have to calculate at 20% with indexation only.

Regards

Vinayak

## Prashant Shah said

A smaller correction,

Capital gain on residential house will be taxed at 20% (with indexation).

However for securities the capital gain tax can be calculated at 10% without indexation and 20% with indexation (whichever is lower).

It is extremely important to identify whether the transations of securities are covered under STT or not.

You can refer to the STT table which I have posted in the relevant post.

Regards,

Prashant V Shah.

## sachin said

sir thank u very much

## kavya joshi said

Hello Sir,

Unfortunately i could not clear AFP exam in my previous attempt. I am giving it again in september.

Sir, an observation I made in my last exam was that the question on taxation I wasnt abe to solve despite being good at the subject! Questions pertaining to capital gains etc were easy (expected questions) but there were some questions pertaining to tax advantage if we buy a house (loan) vis a vis HRA which I could not solve. I went through a lot of case studies but am not able to find any such questions.

Could you help me in this regard. Please!

## Vinayak said

Dear Kavya,

If you can exactly reproduce the question, may be we will be able to solve. Most of the times, if the conceptual clarity is there, then it is just a matter of some analysis and correct interpretation of the question which will help in getting the correct solution. The previous case studies may not be having these type of questions but then there will always be some new type of questions which may be asked. Even in my exam I encountered some type of questions which were not there in the case studies. This is the beauty of this exam. It tests your conceptual clarity and application of these concepts alongwith correct understanding of the question. If we get these things correct, then the exam will be a breeze!

Pls. try to reproduce the question and we will try to solve. Prashant sir is there to guide us.

Regards

Vinayak

## Hari Om said

where r d solutions

## Prashant Shah said

Dear Hari Om,

These are the sample case studies published by Fpsb. Of which two will be asked in the exam. Hence there can not be questions and solutions for the same.

Regards,

Prashant.

## Hari Om said

HI, you mean similar case studies will b asked or exactly the same. Guess only one will b asked to solve.

Regards

## Prashant Shah said

There will be the same case studies.

2 case studies are asked in the exam

Prashant.

## kavya joshi said

Hey Sir!

I tried solving the latest case study uploaded by FPSB- SP3

I have a doubt in Q2 and Q4 regarding the method used to explain the goal seeking parts.

In Q 2, how has 9.10% taken out? Is it trial and error or some other logical reasoning.

In Q4, is 35% taken out by guess?

Hope to hear from you soon.

## jinali said

Dear Prashant Sir,

Just a couple of days before i appeared for the final module but failed… the type of questions n the difficulty level is way too up… can u please help me how to go about it….

## tanutng said

Dear Prashant Sir,

I am planning to attempt CFP final exam in last week of July 2013,i have cleared all other modules.i request you to please guide me regarding preparations for finals,the way I have started I am unable to solve a single question without referring solution. I want to pass finals in first attempt.

Kindly help me.

## Prashant Shah said

Dear Tanutng,

Your concern is a common. I think it happens with everyone who start solving past papers of AFP. Keep practicing and feel free to ask. We all are here to help you.

Prashant.

## pankaj wadurkar said

hi vinayak i am pankaj i had given final before 1 month but i couldnt clear. i study hard for 2 months but when i actually went to solve paper i got confused i left paper before 1 hour i got 42 marks.

## Vinayak said

Dear Pankaj,

Sorry for the late reply. I have not been regular with this blog beacause of some other preoccupation.

To answer your question, don’t be disheartened. Please go through this blog very thoroughly, especially the section on Advanced FP and also go through the comments. It will help you a great deal. You will find lots of questions answered and also some good tips. Go through the previous years case studies and practise thoroughly. Some changes have come in the exam, which you can find out through this blog.

The final paper is not that difficult to crack if you have good conceptual clarity and thorough understanding of all the modules. So practise hard and you will succeed.

All the Best.

Vinayak

## bhavesh vora said

hi i am appearing for cfp fina on 24th dec pl give me some questions which are recently asked in exam so i can prepare well

## Ritesh Yadav said

Hi sir,

Can we have questions n their solutions based on these 6 case studies.

Thanks

## Pooja said

Hi, could you please help me with the questions and solutions of the 5 case studies for this year?

Regards,

Pooja

## rajiv sanoriya said

Hello sir,

Could you please suggest me any online excel courses for how to solve FPSB question on excel instead of using a calculator.

## Prashant Shah said

Dear Rajiv.

You can download Fpsb sample papers with solutions from Fpsb site itself.

They are all in excel format. No need to spend money and learn from it.

Regards.

## Gauri Sanjay Chavan said

HELLO SIR,

I am planning to give final exam of CFP. please help me know the format and sample questions and solutions.

## Prashant Shah said

Hi, Gauri

Request you to see the latest video which I have uploaded about how to study AFP. Post that you can download past papers from this site. Thats the way to go. Best wishes.

Prashant Shah.

## Gauri Sanjay Chavan said

If possible , can you give me the site for the past papers of final module?

## Prashant Shah said

https://prashantvshah.wordpress.com/category/cfp/advance-fp/case-study/

## GAURI SANJAY CHAVAN said

I download the papers which you provided on this site, i just wanted to ask , i am planning to give the exam on the end of November, in the classes they said, you will get the 2 case studies out of 5 which is already given in the book , but their questions are not provided, i wanted to know, the questions which will aks in the exam are similar to the questions which you provided on those case studies?? please help me to solve my query.

## Prashant Shah said

Dear Gauri,

There are two solved case studies on FPSB site, you can solve both. You will be getting questions identical to past papers.

Regards.

Prashant.

## GAURI SANJAY CHAVAN said

urvashi and Roger case studies?

## Gina said

Dear Prashant,

I see the way you assist people concerning the CFP certification. I need your assistance. I have just registered for Introduction to Financial Planning (CFP 1) and we have been given a case study. I would like to know if there is a procedure to answer these questions and how to get it. Thank you

## anushka jain said

hello sir i m not cleared in advance financial planning paper.i got 49% marks.

## Prashant Shah said

Hi Anushka,

Very sad to hear the same. Even couple of my students too failed with same score in recent time. I know that its the worst score to fail. Work hard and now try to score minimum 75%.

Regards.

## anushka jain said

hello sir

i want to know that from where i should start again for AFP prepration?

please suggest me

## Kunjan said

Where the exams really tough because i have my exam after 3 days

## SS said

Hi Kunjan , Anushka,

Could you please tell me how the questions were? were there any questions from the case studies similar to the ones given in the sample case studies? If you could remember any of the question, it will be very useful….TIA.