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Important Questions of Investment Planning, CFP

Following questions are provided by students who appeared in exams

Question – 1

Your analysis on equity and bonds market tells that you should be fully invested in both. You invest lump-sum of Rs.2.00 Lakhs each in equity and debt with quarterly investment of Rs.25,000 each in both classes for a year. You wait for 2 years expecting returns of 15% p.a. from equity & 11%% p.a from debt in 3 years span. After 3 years, you redeem 50% from equity & 20% from debt and invest it in liquid asset of 5.5% p.a. You expect equity to remain sideways and debt to return 8% in his 4th year. If the liquid investment in the beginning of 5th year are reinvested in equity with expectation of 20% returns while debt gives 8% in this period. What amount could be accumulated?

1. Rs. 11.65 Lakhs
2. Rs.9.50 Lakhs
3. Rs. 12.55 Lakhs
4. Rs.10.33 Lakhs

Question -2

Your client started investing Rs. 14,000 per month a year ago in an asset allocation of 30:70 in equity and debt to achieve a goal in 6 years from now by accumulating Rs. 15.00 lakh. You realize that he would be requiring Rs. 20.00 lakh for the same goal. You expect equity and debt to give returns of 11.75% p.a. and 8.25% p.a., respectively in the entire period of investment. You assess changing asset allocation to 65:35 in equity and debt by investing Rs. 2,000 additional per month to see how closer he can reach to his goal. You find that

1. Shortfall of Rs. 110765
2. Surplus of Rs. 146580
3. Shortfall of Rs. 120765
4. No Shortfall, No Surplus