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

Total interest, initial amount borrowed or lent Rate of interest, Total amount payable Interest per annum, Amount which is principally agreed to be paid Minimum interest, Total amount payable None of the above

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**Q2- In the formula , Interest = Principal X Rate X Time, Rate is _____ and Time is ______ ?**

Bank rate of interest, One year period of time Rate percentage of interest per annum, period expressed in year which some amount is borrowed or lent Market rate per annum, Periodicity of interest charging Market rate of interest, Initial period fixed for repayment None of the above

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Q3 A purchased a scooter by obtaining a loan of Rs at the rate of 15% simple interest p.a. How much interest in total will pay if the loan is taken for 3 years ? Rs 4500 Rs 10,500 Rs 12500 Rs 13500 Rs 15000

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Q 4 - Installment is ? Fixed amount, that is to be repaid regularly in a specified period Fixed amount, that is repaid at will of the borrower during any period Fixed amount of interest repaid by the borrower during any specified period Fixed amount of repayment of the principal amount only None of the above

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**Q 5 - Amount is ______ whereas principal is ___ ?**

Present Value, Future Value Past value, present value Future value, present value Present value, past value None of the above

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**Q6 – Which of the following is true ?**

Amount = (Principal + Interest) or (A=P + I) Amount = (Principal + Principal X Rate X Time ) or ( A = P + Prt) Amount + { Principal(1 + Rate X Time) } or { A = P (1 + rt ) } Interest (Amount – Principal) or I = (A-P) Interest = ( Future Value – Present Value) or I = (FV – PV) All of the above

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**Q 7 – Which of the followings are true ?**

P = I/RT R = I/PT T = I/PR A + P(1 + rt) I = A – P All of the above

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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 ? 12000 15000 20000 18000 16000

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

A = P(1 + r)ⁿ A = Prt A = Prt + P(1 + r) None of the above All of the above

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**Q 10 - Ramesh has deposited Rs 10000 for 3 years**

Q 10 - Ramesh has deposited Rs 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 ? 13000 12000 13110 13310 13130

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Q 11 – In the previous question , (1+ r)3 becomes (1 + 10/100) 3 = ( ) 3 = ( 1.10) How is the figure calculated ? By manual calculation, as ( 1.10 )3 = 1.10 X 1.10 X 1.10 Using calculator Using MS Excel and applying ^ function ( exponential function) ie (1.10 )3 = ( 1 .10)^ 3 Using future value chart, where value of an amount for different periods and for different interest rate is given All of the above

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

Principal Investment Cash flow None of these All of a & b & c

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

FVn = PV (1 + r )n PV = FVn / ( 1 + r )ⁿ PV = FVn X ( 1 + r )-n All of these None of these

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Q 14 – If you want to receive Rs at the end of 10 years, how much have you to invest today, considering the interest rate is 10% p.a ( yearly compounding) ? 20000 15440 14878 19253 14325

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Q 15 -Vinod is investing Rs 1500 every year for the next three 10% per annum. How much amount will he be getting at the end of three years ? 3150 4580 4965 5461 4357

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Q -16 Vinod is investing Rs 1500 every year for the next three 10% per annum. What is the present value of the amount he is going to get at the end of three years 3150 4580 3730 5125 3530

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Q Vinod is investing Rs 1500 every year at the beginning of the year for the next three 10% per annum. How much amount he is going to get at the end of three years 4965.5 5461.5 4567.2 5460 3437.6

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**Q 18 – Rajan wants to take a loan of Rs 30000 for purchasing a fridge**

Q 18 – Rajan wants to take a loan of Rs 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 Rs 7500 Rs 9058 Rs 8036 Rs 9435 Rs 8000

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Q – 19 Ranjan wants to receive Rs 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 Rs 1,25,000 Rs 1,25,392 Rs 1,28,000 Rs 1,28,392 Rs 1,27,392

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**Q - 20. Ajay has borrowed a sum of Rs 40000 repayable in 10 years**

Q Ajay has borrowed a sum of Rs repayable in 10 years. What monthly repayment Ajay has to make at 15% interest compounded monthly. Rs 545 Rs 500 Rs 783 Rs 645 Rs 610

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Q A firm is planning to purchase a machinery worth Rs 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% . 10321 10462 12000 12163 10000

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**Q -22 Coupon rate is : Market rate of return of a debenture**

The rate at which a bond is purchased The total amount which one gets on maturity of debenture Specific rate of interest at which a bond is issued None of the above

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**Q 23 - The value of bond is Face value**

Present value of cash flows in future Market price Issue price None of the above

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

At par At discount At premium At any rate None of these

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Q 25 – Zero coupon bonds : Do not carry any interest. It is issued at a lower price than its redemption value Carry a fixed rate of interest payable at the time of redemption of the bond Bears zero risk All of the above None of the above

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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 Cash flow Investment Discount Year None of these

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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: Future value Internal rate of return Net present Value Cash outflow None of these

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

More than zero Less than Zero Equal to zero Double of zero None of these

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Q 29 – If the total of the present value is less than the cash outlay of a project, then the project is : Viable Not viable At no risk Nothing can be concluded Extremely viable

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

Less than the cost of capital More than the cost of capital Half of the cost of capital No relevance None of the above

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Q1 The following expression matches the interest factor of continuous compounding and m compounding. Plug r=0.2, m=4 to get x=0.205.

Q1 The following expression matches the interest factor of continuous compounding and m compounding. Plug r=0.2, m=4 to get x=0.205.

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