## SOLVED JAIIB COMBINED PAPER 13:

**1. An asset cost Rs. 5,00,000/- has residual value of Rs. 50,000/-, and is expected to last 5 years. Calculate the total depreciation till 3rd year using Straight-line Method.**

**a. Rs. 90,000**

b. Rs. 1,00,000

c. Rs. 2,70,000

d. Rs. 3,00,000

b. Rs. 1,00,000

c. Rs. 2,70,000

d. Rs. 3,00,000

**Ans - c**

**Explanation :**

**Expected Life = 5 Years**

Total Depreciation = Cost of the Asset - Residual Value

So, Value to be taken for Depreciation = 500000 - 50000 = 450000

Depreciation per year = 450000/5 = 90000

Total Depreciation = Cost of the Asset - Residual Value

So, Value to be taken for Depreciation = 500000 - 50000 = 450000

Depreciation per year = 450000/5 = 90000

**So, Total Depreciation till 3rd year will be**

**Rs. 90000 * 3 = 2,70,000/-**

2.

2.

**What is the market value of a bond that will pay a total of fifty semiannual coupons of Rs. 80 each over the remainder of its life? Assume the bond has a Rs. 1,000 face value and a 12% yield to maturity.**

**a. Rs. 734.86**

b. Rs. 942.26

c. Rs. 1,135.90

d. Rs. 1,315.24

b. Rs. 942.26

c. Rs. 1,135.90

d. Rs. 1,315.24

**Ans - a**

3.

3.

**The decision tree analysis for NPV estimation recognizes that ......**

(i) Environment always certain,

(ii) Environment is uncertain,

(iii) Environment is dynamic

(i) Environment always certain,

(ii) Environment is uncertain,

(iii) Environment is dynamic

**a. Only (i) and (ii)**

b. Only (i) and (iii)

c. Only (ii) and (iii)

d. (i), (ii) and (iii)

b. Only (i) and (iii)

c. Only (ii) and (iii)

d. (i), (ii) and (iii)

**Ans - c**

4.

4.

**Rate of return earned by an investor who purchases a bond and holds it till maturity is called as**

**a. Intrinsic Value**

b. Coupon Rate

c. YTM

d. Redemption Value

b. Coupon Rate

c. YTM

d. Redemption Value

**Ans - c**

5.

5.

**A person invested Rs. 800000 in a bank FDR @ 10% p.a. for 1 year. If interest is compounded on half-yearly basis, the amount payable shall be ......**

**a. 872000**

b. 880000

c. 882000

d. 884000

b. 880000

c. 882000

d. 884000

**Ans - c**

**Solution:**

**P = 800000**

R = 10% / 2 = 5% (since compounding is semi-annually, rate is divided by 2

T = 1*2 = 2 (since compounding is semi-annually, time is multiplied by 2)

Since compounding is semi-annually and its only 1-time investment, the formula to be used:

R = 10% / 2 = 5% (since compounding is semi-annually, rate is divided by 2

T = 1*2 = 2 (since compounding is semi-annually, time is multiplied by 2)

Since compounding is semi-annually and its only 1-time investment, the formula to be used:

**FV = P * (1+R)^T**

So,

FV = 800000 * (1+0.05)^2

= 882000

So,

FV = 800000 * (1+0.05)^2

= 882000

6.

6.

**In exchange of currencies deal, "cash" is also called as**

**a. TOM**

b. Ready

c. Spot

d. Forward

b. Ready

c. Spot

d. Forward

**Ans - b**

7.

7.

**A truck cost Rs 1,05,000 with a residual value of Rs. 1,00,000. it has an estimated useful life of 5 years. If the truck was bought on July 9, what would be the book value at the end of year 1?**

**a. Rs. 1,00,000**

b. Rs. 85,000

c. Rs. 80,000

d. Rs. 25,000

b. Rs. 85,000

c. Rs. 80,000

d. Rs. 25,000

**Ans - a**

7.

7.

**The intrinsic value of bond is not the ......**

(i) Face value,

(ii) Present value of cash flows in future,

(iii) Market value

(i) Face value,

(ii) Present value of cash flows in future,

(iii) Market value

**a. Only (i) and (ii)**

b. Only (i) and (iii)

c. Only (ii) and (iii)

d. (i), (ii) and (iii)

b. Only (i) and (iii)

c. Only (ii) and (iii)

d. (i), (ii) and (iii)

**Ans - b**

8.

8.

**Coupon rate is not the ......**

(i) Specific rate of interest at which a bond is issued,

(ii) Market rate of return of debenture,

(iii) The rate at which a bond is purchased

(i) Specific rate of interest at which a bond is issued,

(ii) Market rate of return of debenture,

(iii) The rate at which a bond is purchased

**a. Only (i) and (ii)**

b. Only (i) and (iii)

c. Only (ii) and (iii)

d. (i), (ii) and (iii)

b. Only (i) and (iii)

c. Only (ii) and (iii)

d. (i), (ii) and (iii)

**Ans - c**

9.

9.

**Mix of debit and equity is known as**

**a. Organisational structure of the firm**

b. Financial structure of the firm

c. Capital structure of the firm

d. Bond equity structure of the firm

b. Financial structure of the firm

c. Capital structure of the firm

d. Bond equity structure of the firm

**Ans - c**

10.

10.

**An asset cost Rs. 16,00,000/- has residual value of Rs. 1,00,000/-, and is expected to last 5 years. Calculate the depreciation for 4th year using sum of the digits Method.**

**a. Rs. 100000**

b. Rs. 200000

c. Rs. 300000

d. Rs. 400000

b. Rs. 200000

c. Rs. 300000

d. Rs. 400000

**Ans - b**

**Explanation :**

**D = (nth/E(sigma)n)(cost-Residual Value)**

E(sigma)n = 1+2+3+4+5 = 15

Cost-Residual Value = 1600000 - 100000 = 1500000

E(sigma)n = 1+2+3+4+5 = 15

Cost-Residual Value = 1600000 - 100000 = 1500000

**1st year = 5/15(1500000) = 500000**

2nd year = 4/15(1500000) = 400000

3rd year = 3/15(1500000) = 300000

4th year = 2/15(1500000) = 200000

5th year = 1/15(1500000) = 100000

11.

2nd year = 4/15(1500000) = 400000

3rd year = 3/15(1500000) = 300000

4th year = 2/15(1500000) = 200000

5th year = 1/15(1500000) = 100000

11.

**A sum of Rs. 25,400 is lent out into two parts, one at 12% p.a. and the other at 12.5% p.a. If the total annual income from interest is Rs. 3116. the money lent at 12% is......**

**a. Rs. 10,000**

b. Rs. 11,800

c. Rs. 12,400

d. Rs. 13,400

b. Rs. 11,800

c. Rs. 12,400

d. Rs. 13,400

**Ans - b**