q1 – in the formula, interest = principal x rate x time, interest is _____ and principal is _____...

Q1 – In the formula , Interest = Principal X Rate X Time, Interest is _____ and principal is _____ ?

(a) Total interest, initial amount borrowed or lent

(b) Rate of interest, Total amount payable(c) Interest per annum, Amount which is

principally agreed to be paid(d) Minimum interest, Total amount payable(e) None of the above

Q2- In the formula , Interest = Principal X Rate X Time, Rate is _____ and Time is ______ ?(a) Bank rate of interest, One year period of time(b) Rate percentage of interest per annum,

period expressed in year which some amount is borrowed or lent

(c) Market rate per annum, Periodicity of interest charging

(d) Market rate of interest, Initial period fixed for repayment

(e) None of the above

Q3 A purchased a scooter by obtaining a loan of Rs 30000 at the rate of 15% simple interest p.a. How much interest in total will pay if the loan is taken for 3 years ?

(a) Rs 4500(b) Rs 10,500(c) Rs 12500(d) Rs 13500(e) Rs 15000

Q 4 - Installment is ?

(a) Fixed amount, that is to be repaid regularly in a specified period

(b) Fixed amount, that is repaid at will of the borrower during any period

(c) Fixed amount of interest repaid by the borrower during any specified period

(d) Fixed amount of repayment of the principal amount only

(e) None of the above

Q 5 - Amount is ______ whereas principal is ___ ?

(a) Present Value, Future Value(b) Past value, present value(c) Future value, present value(d) Present value, past value(e) None of the above

Q6 – Which of the following is true ?

(a) Amount = (Principal + Interest) or (A=P + I)(b) Amount = (Principal + Principal X Rate X Time )

or ( A = P + Prt)(c) Amount + { Principal(1 + Rate X Time) } or { A

= P (1 + rt ) }(d) Interest (Amount – Principal) or I = (A-P)(e) Interest = ( Future Value – Present Value) or I =

(FV – PV)(f) All of the above

Q 7 – Which of the followings are true ?

(a) P = I/RT (b) R = I/PT(c) T = I/PR(d) A + P(1 + rt)(e) I = A – P(f) All of the above

Q – 8 A deposit matures to Rs 24,200 after 3 years at simple interest of 7% per annum. What is the principal amount of the deposit ?

(a) 12000(b) 15000(c) 20000(d) 18000(e) 16000

Q 9 - What is the formula for charging compound interest with annual compounding ?

(a) A = P(1 + r)ⁿ(b) A = Prt(c) A = Prt + P(1 + r)(d) None of the above(e) All of the above

Q 10 - Ramesh has deposited Rs 10000 for 3 years. The interest is compounded annually at 10%. What will be the amount receivable by Ramesh at the end of the 3 years period ?

(a) 13000(b) 12000(c) 13110(d) 13310(e) 13130

Q 11 – In the previous question , (1+ r)3 becomes (1 + 10/100) 3 = ( 1 + 0.10 ) 3 = ( 1.10) 3 . How is the figure calculated ?

(a) By manual calculation, as ( 1.10 )3 = 1.10 X 1.10 X 1.10

(b) Using calculator(c) Using MS Excel and applying ^ function

( exponential function) ie (1.10 )3 = ( 1 .10)^ 3(d) Using future value chart, where value of an

amount for different periods and for different interest rate is given

(e) All of the above

Q 12 - In the terms Present value or Future value , the term value is also known as:

(a) Principal(b) Investment(c) Cash flow(d) None of these(e) All of a & b & c

Q 13 – The relationship between Present Value and Future Value ( for single cash flow ) is :

(a) FVn = PV (1 + r )n

(b) PV = FVn / ( 1 + r )ⁿ

(c) PV = FVn X ( 1 + r )-n

(d) All of these(e) None of these

Q 14 – If you want to receive Rs 40000 at the end of 10 years, how much have you to invest today, considering the interest rate is 10% p.a ( yearly compounding) ?

(a) 20000(b) 15440(c) 14878(d) 19253(e) 14325

Q 15 -Vinod is investing Rs 1500 every year for the next three years @ 10% per annum. How much amount will he be getting at the end of three years ?

(a) 3150(b) 4580(c) 4965(d) 5461(e) 4357

Q -16 Vinod is investing Rs 1500 every year for the next three years @ 10% per annum. What is the present value of the amount he is going to get at the end of three years

(a) 3150(b) 4580(c) 3730(d) 5125(e) 3530

Q -17 - Vinod is investing Rs 1500 every year at the beginning of the year for the next three years @ 10% per annum. How much amount he is going to get at the end of three years

(a) 4965.5(b) 5461.5(c) 4567.2(d) 5460(e) 3437.6

Q 18 – Rajan wants to take a loan of Rs 30000 for purchasing a fridge. The rate of interest on loan per annum is 8%. If Rajan wants to pay back the money along with interest in four equal yearly installments what should the yearly installment

(a) Rs 7500(b) Rs 9058(c) Rs 8036(d) Rs 9435(e) Rs 8000

Q – 19 Ranjan wants to receive Rs 15000 every year for 15 years by investing in an annuity when the interest rate is 8%, the amount he needs to invest in annuity is

(a) Rs 1,25,000(b) Rs 1,25,392(c) Rs 1,28,000(d) Rs 1,28,392(e) Rs 1,27,392

Q - 20. Ajay has borrowed a sum of Rs 40000 repayable in 10 years. What monthly repayment Ajay has to make at 15% interest compounded monthly.

(a) Rs 545(b) Rs 500(c) Rs 783(d) Rs 645(e) Rs 610

Q 21 - A firm is planning to purchase a machinery worth Rs 50000 after 4 years. They have planned to make savings right from this year. Calculate the yearly savings, they are required to make to purchase the machinery if the return on investment is 12% .

(a) 10321(b) 10462(c) 12000(d) 12163(e) 10000

Q -22 Coupon rate is :

(a) Market rate of return of a debenture(b) The rate at which a bond is purchased(c) The total amount which one gets on maturity

of debenture(d) Specific rate of interest at which a bond is

issued(e) None of the above

Q 23 - The value of bond is

(a) Face value(b) Present value of cash flows in future(c) Market price(d) Issue price(e) None of the above

Q 24 – When the expected rate of interest is lower than the coupon rate a bond may be issued

(a) At par(b) At discount(c) At premium(d) At any rate(e) None of these

Q 25 – Zero coupon bonds :

(a) Do not carry any interest. It is issued at a lower price than its redemption value

(b) Carry a fixed rate of interest payable at the time of redemption of the bond

(c) Bears zero risk(d) All of the above(e) None of the above

Q 26 – Internal rate of return (IRR) is the rate of ___ in NPV equation at which the present value of cash flows of a project equals its initial outlay

(a) Cash flow(b) Investment(c) Discount(d) Year(e) None of these

Q 27 – For a project the difference between the sum of the present value of cash flows of the project and the cash outlays for financing the project is its:

(a) Future value(b) Internal rate of return(c) Net present Value(d) Cash outflow(e) None of these

Q 28– IRR is the value of the discount rate at which the NPV of a project is :

(a) More than zero(b) Less than Zero(c) Equal to zero(d) Double of zero(e) None of these

Q 29 – If the total of the present value is less than the cash outlay of a project, then the project is :

(a) Viable(b) Not viable(c) At no risk(d) Nothing can be concluded(e) Extremely viable

Q 30 – A project should be undertaken if its IRR is :

(a) Less than the cost of capital(b) More than the cost of capital(c) Half of the cost of capital(d) No relevance(e) None of the above