Investment Adviser (Level 2) Free Demo Test 3

The investor buys 100 shares at Rs. 200 per share on 60% margin, meaning they invest 40% of the total value (100% – 60% margin). The initial investment is Rs. 80,000 (100 shares * Rs. 200 per share * 40%). When the stock price rises to Rs. 220, the value of the investment becomes Rs. 88,000 (100 shares * Rs. 220 per share). The percentage return on investment is calculated as [(Final Value – Initial Investment) / Initial Investment] * 100, which is [(Rs. 88,000 – Rs. 80,000) / Rs. 80,000] * 100 = 10%.

In the National Pension System (NPS), individuals can exit before turning 60 years by withdrawing 20% of the accumulated savings in a lump sum, and the remaining 80% must be used to compulsorily purchase an annuity.

Diversification helps in spreading investment across different assets, reducing the overall risk of the portfolio. While it may not eliminate all risk, it enhances risk-adjusted returns by minimizing the impact of poor-performing assets on the overall portfolio performance.

Annuity received from insurance companies is generally considered as income from other sources for taxation purposes. It is not classified as income from salary or profits in lieu of salary.

Daniel Kahneman and Amos Tversky introduced Prospect Theory in 1979, which is a behavioral economics theory that describes how people make decisions under uncertainty. It challenges traditional economic theories by highlighting that individuals may not always make rational choices based on expected utility.

In the case of speculative business losses, they can be carried forward for a maximum of 4 years for set-off against future speculative business profits.

An investor seeking a high level of return and willing to bear higher risks is likely to be recommended an aggressive portfolio. Aggressive portfolios typically consist of high-risk, high-reward investments, such as stocks with high volatility.