SOLVED CAIIB COMBINED PAPER 10:
1. What is the discount factor for Re. 1 to be received at the end of 2 yr with prevalent rate of 8% ?
a. 0.890
b. 0.873
c. 0.857
d. 0.842
Ans - c
Solution :
= 1/(1+r)n
= 1/(1.08)^2
= 0.857
2. A console bond of Rs. 10000 is issued at 6%. Coupon current interest rates and 9%. Find out the current value of the console bond.
a. Rs.7660
b. Rs.6760
c. Rs.6667
d. Rs.6676
And :c
Solution :
= 10000*0.06/0.09
= 10000*0.6667
= 6667
3. In case of compound Interest, if compounding is done quarterly, then r is divided by ...
a. 2
b. 3
c. 4
d. 6
Ans - c
4. A jar contains 3 red marbles, 7 green marbles and 10 white marbles. If a marble is drawn at random, What is the probability that marble drawn is white?
a. 2/5
b. 1/2
c. 3/8
d. 10/13
Ans – b
Solution :
Here Red = 3
Green = 7
White = 10
Hence total sample space is (3+7+10)= 20
Out of 20 one ball is drawn n(S) = {c(20,a.} = 20
To find the probability of occurrence of one White marble out of 10 white ball
n(R)={c(10,a.} = 10
Hence P(R) = n(R)/n(S)
= 10/20 = 1/2
5. An investment at 10% is compounded monthly, what shall be the effect interest rate for this?
a. 10.18 %
b. 10.25 %
c. 10.47 %
d. 10.51 %
Ans - c
Solution :
= (1+0.10/12)^12-1
= 10.47
6. What is sampling for groups with considerable variation within but similar to each other called ?
a. cluster
b. stratified
c. systematic
d. random
Ans - a
7. 15 year, 8 % Rs 1000 face value bond is currently trading at Rs 958. The YTM of this bond must be......
a. less than 8%
b. equal to 8%
c. greater than 8%
d. unknown
Ans - c
8. Mr.Ram wants to have Rs 20000 after a year. How much he should deposit in a bank to get this amount if the prevailing rate of interest is 9% ?
a. 17896
b. 18104
c. 18224
d. 18348
Ans - d.
Solution :
20000/1.09
9.MR. Ravi is expected to join a professional course after 03 years from now and he would be needing a sum of Rs.3 lacs at that time. If he wants to save the amt in annual installments and prevailing interest rates are 5%, How much amt he should deposit per annum?
a. 92163
b. 90631
c. 91363
d. 92531
Ans - A
Solution :
= fv*r/(i+r)*{(1+r)^n-1}
= 300000*.05/(1.05){(1.05)^3-1}
= 90163
10. If payments are made/received at the beginning of the period, this Annuity is called as ...
a. Perpetual Annuity
b. Annuity Ordinary
c. Annuity Due
d. Advance Annuity
Ans - c
11. A sack contains 4 black balls 5 red balls. What is probability to draw 1 black ball and 2 red balls in one draw ?
a. 12/21
b. 9/20
c. 10/21
d. 11/20
Ans – c
Solution :
Out of 9, 3 (1 black & 2 red. are expected to be drawn)
Hence sample space
n(S) = 9c3
= 9!/(6!×3!)
= 362880/4320
= 84
Now out of 4 black ball 1 is expected to be drawn hence
nb. = 4c1
= 4
Same way out of 5 red balls 2 are expected be drawn hence
n(R) = 5c2
= 5!/(3!×2!)
= 120/12
= 10
Then P(B U R) = n(B)×n(R)/n(S)
i.e 4×10/84 = 10/21
12. Assume that you have a 6% Coupon console bond. The original face value is Rs. 1000 and the interest rate is 9%. Find the current value of this bond.
a. 567
b. 576
c. 667
d. 676
Ans - c
Explanation :
Current value of console bond
= Coupon ÷ interest rate
= 60 ÷ 0.09
= Rs. 667
a. 0.890
b. 0.873
c. 0.857
d. 0.842
Ans - c
Solution :
= 1/(1+r)n
= 1/(1.08)^2
= 0.857
2. A console bond of Rs. 10000 is issued at 6%. Coupon current interest rates and 9%. Find out the current value of the console bond.
a. Rs.7660
b. Rs.6760
c. Rs.6667
d. Rs.6676
And :c
Solution :
= 10000*0.06/0.09
= 10000*0.6667
= 6667
3. In case of compound Interest, if compounding is done quarterly, then r is divided by ...
a. 2
b. 3
c. 4
d. 6
Ans - c
4. A jar contains 3 red marbles, 7 green marbles and 10 white marbles. If a marble is drawn at random, What is the probability that marble drawn is white?
a. 2/5
b. 1/2
c. 3/8
d. 10/13
Ans – b
Solution :
Here Red = 3
Green = 7
White = 10
Hence total sample space is (3+7+10)= 20
Out of 20 one ball is drawn n(S) = {c(20,a.} = 20
To find the probability of occurrence of one White marble out of 10 white ball
n(R)={c(10,a.} = 10
Hence P(R) = n(R)/n(S)
= 10/20 = 1/2
5. An investment at 10% is compounded monthly, what shall be the effect interest rate for this?
a. 10.18 %
b. 10.25 %
c. 10.47 %
d. 10.51 %
Ans - c
Solution :
= (1+0.10/12)^12-1
= 10.47
6. What is sampling for groups with considerable variation within but similar to each other called ?
a. cluster
b. stratified
c. systematic
d. random
Ans - a
7. 15 year, 8 % Rs 1000 face value bond is currently trading at Rs 958. The YTM of this bond must be......
a. less than 8%
b. equal to 8%
c. greater than 8%
d. unknown
Ans - c
8. Mr.Ram wants to have Rs 20000 after a year. How much he should deposit in a bank to get this amount if the prevailing rate of interest is 9% ?
a. 17896
b. 18104
c. 18224
d. 18348
Ans - d.
Solution :
20000/1.09
9.MR. Ravi is expected to join a professional course after 03 years from now and he would be needing a sum of Rs.3 lacs at that time. If he wants to save the amt in annual installments and prevailing interest rates are 5%, How much amt he should deposit per annum?
a. 92163
b. 90631
c. 91363
d. 92531
Ans - A
Solution :
= fv*r/(i+r)*{(1+r)^n-1}
= 300000*.05/(1.05){(1.05)^3-1}
= 90163
10. If payments are made/received at the beginning of the period, this Annuity is called as ...
a. Perpetual Annuity
b. Annuity Ordinary
c. Annuity Due
d. Advance Annuity
Ans - c
11. A sack contains 4 black balls 5 red balls. What is probability to draw 1 black ball and 2 red balls in one draw ?
a. 12/21
b. 9/20
c. 10/21
d. 11/20
Ans – c
Solution :
Out of 9, 3 (1 black & 2 red. are expected to be drawn)
Hence sample space
n(S) = 9c3
= 9!/(6!×3!)
= 362880/4320
= 84
Now out of 4 black ball 1 is expected to be drawn hence
nb. = 4c1
= 4
Same way out of 5 red balls 2 are expected be drawn hence
n(R) = 5c2
= 5!/(3!×2!)
= 120/12
= 10
Then P(B U R) = n(B)×n(R)/n(S)
i.e 4×10/84 = 10/21
12. Assume that you have a 6% Coupon console bond. The original face value is Rs. 1000 and the interest rate is 9%. Find the current value of this bond.
a. 567
b. 576
c. 667
d. 676
Ans - c
Explanation :
Current value of console bond
= Coupon ÷ interest rate
= 60 ÷ 0.09
= Rs. 667