AS-05 (iv) Compulsory · Fellowship Actuarial

Finance and Investment — Mock Tests & Exam Prep

Finance and investment — asset classes, portfolio management and the investment of insurance funds.

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555
Verified questions
100
Questions per exam
2 hrs
Exam duration
60%
Pass mark
40
Credit points

Try AS-05 (iv) free — 5 real questions

These are 5 of the 555 AS-05 (iv) questions in Certena, taken from across the paper. Every answer key has been checked against a source — a printed answer key, a textbook extract, or arithmetic — not guessed. Reveal the answer and the explanation below each question. No sign-up needed.

Question 1
A put option has a strike price of Rs 640 and the underlying trades at Rs 598. What is its intrinsic value per share?
  1. ARs 0
  2. BRs 598
  3. C-Rs 42
  4. DRs 1238
  5. ERs 42
Show answer & explanation

Answer: E. Rs 42

For a put option, intrinsic value = strike price - current stock price = 640 - 598 = 42, which is positive, so the put is in-the-money by 42.

Question 2
When is the capital gain part of total return generally received or recognised?
  1. AWhen the asset is sold
  2. BOn the date on which the investment is made
  3. CWhen interest is credited to the investor's account
  4. DEach year when the dividend is declared
  5. EWhen the market price first exceeds the cost
Show answer & explanation

Answer: A. When the asset is sold

Capital gain is the increase in the market value of the investment, and it is generally not received or recognised until the asset is sold.

Question 3
If partners have no partnership deed, which provisions of the Partnership Act apply?
  1. AProfits are shared in proportion to capital, with interest paid on capital
  2. BProfits and losses are shared equally, with no salary and no interest on capital
  3. CProfits are shared equally but losses are borne by the senior partner alone
  4. DEach partner receives a salary fixed by the senior partner
  5. EDecisions are taken by the partner holding the largest capital
Show answer & explanation

Answer: B. Profits and losses are shared equally, with no salary and no interest on capital

The main provisions are that all partners contribute capital equally, share profits and losses equally, receive no interest on capital and no salary, and have an equal say in management.

Question 4
What is the position of an investor who buys a corporate bond?
  1. AA lender to the corporation, with no ownership interest in it
  2. BA lender to the corporation, entitled to share in its profits
  3. CA part-owner of the corporation, with voting rights in it
  4. DA guarantor of the other debts of the corporation
  5. EA lender whose interest receipts are free of tax
Show answer & explanation

Answer: A. A lender to the corporation, with no ownership interest in it

When you buy a bond you are lending money to the corporation, and unlike stocks, bonds give no ownership interest; the interest received is taxable.

Question 5
The automated screen-based trading system of the exchanges follows which market principle?
  1. AAn order-driven market, in which orders are matched on price-time priority
  2. BA single-price auction, in which one price is fixed once a day
  3. CA negotiated market, in which brokers settle prices among themselves by telephone
  4. DA dealer market, in which a market maker guarantees every trade
  5. EA quote-driven market, in which dealers quote the prices at which they trade
Show answer & explanation

Answer: A. An order-driven market, in which orders are matched on price-time priority

The automated trading system adopts the principle of an order-driven market, as opposed to a quote-driven system; orders are stored and matched on price-time priority.

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Frequently asked questions

What is AS-05 (iv)?
AS-05 (iv) (Finance and Investment) is a compulsory Fellowship-level examination offered by the Insurance Institute of India (III). Finance and investment — asset classes, portfolio management and the investment of insurance funds.
How many questions are in the AS-05 (iv) exam?
The AS-05 (iv) exam has 100 MCQs to be answered in 120 minutes (2 hours). All questions must be attempted — there is no negative marking.
What is the pass mark for AS-05 (iv)?
You need to score at least 60% to pass AS-05 (iv). Scoring 75% or above earns a Distinction grade.
How many credit points does AS-05 (iv) carry?
AS-05 (iv) carries 40 credit points. These count toward your III certification — 60 credits for Licentiate, 250 for Associateship, 490 for Fellowship.

Related subjects

IC-01
Principles of Insurance
IC-28
Foundation of Actuarial Science
IC-47
Foundation of Casualty Actuarial Science Part - I
IC-81
Mathematical Basis of Life Assurance
IC-84
Foundation of Casualty Actuarial Science Part - II
IC-92
Actuarial Aspects of Product Development

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