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 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