## SOLVED JAIIB COMBINED PAPER 17:

**1. A man invested Rs. 1552 in a stock at 97 to obtain an income of Rs. 128. The dividend from the stock is ...... %**

**a. 7.5**

b. 8

c. 8.5

d. 9.7

b. 8

c. 8.5

d. 9.7

**Ans - b**

**Explanation:**

**By investing Rs. 1552, income = Rs. 128**

By investing Rs. 97, income = Rs. 128/1552 x 97 = Rs. 8

By investing Rs. 97, income = Rs. 128/1552 x 97 = Rs. 8

**Dividend = 8%**

2.

2.

**When overdraft as per cash book and a Cheque of Rs.1000 directly deposited in the bank, but not recorded in cash book ...**

**a. Add Rs.1000 in CB**

b. Deduct Rs.1000 in CB

c. Add Rs.2000 in cash book

d. Deduct Rs.2000 in CB

b. Deduct Rs.1000 in CB

c. Add Rs.2000 in cash book

d. Deduct Rs.2000 in CB

**Ans - b**

3.

3.

**Madhu had availed a loan of Rs. 120000 @ 12%, which she has to pay in 6 equal annual installments. Calculate the amount of installment?**

**a. 21897**

b. 27897

c. 28197

d. 29187

b. 27897

c. 28197

d. 29187

**Ans - d**

**Solution:**

**P = 120000**

R = 12% p.a.

(SINCE PAYMENT IS TO ANNUALLY, NOT Monthly, Rate IS NOT divided by 12)

T = 6 yrs

(SINCE PAYMENT IS TO BE ANNUALLY, NOT Monthly, Time IS NOT multiplied with 12)

So, we can well use EMI formula in this question as we did in questions no 4, 5, 6 & 7

R = 12% p.a.

(SINCE PAYMENT IS TO ANNUALLY, NOT Monthly, Rate IS NOT divided by 12)

T = 6 yrs

(SINCE PAYMENT IS TO BE ANNUALLY, NOT Monthly, Time IS NOT multiplied with 12)

So, we can well use EMI formula in this question as we did in questions no 4, 5, 6 & 7

**The formula of EMI =**

P * R * (1 + R)^T ÷ { (1 + R)^T - 1 }

EMI = 120000 × 0.12 × 1.12^6 ÷ (1.12^6 – 1)

= (120000*0.012*1.9738) ÷ 0.9738

= 28423 / 0.9738

= 29187

P * R * (1 + R)^T ÷ { (1 + R)^T - 1 }

EMI = 120000 × 0.12 × 1.12^6 ÷ (1.12^6 – 1)

= (120000*0.012*1.9738) ÷ 0.9738

= 28423 / 0.9738

= 29187

**4.**

**Time value of money is irrelevant in ......**

(i) Accounting rate of return method,

(ii) Pay back period method,

(iii) Internal rate of return method

(i) Accounting rate of return method,

(ii) Pay back period method,

(iii) Internal rate of return method

**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 - a**

5.

5.

**What would you pay for a share of ABC Corporation stock today if the next dividend will be Rs. 3 per share, your required return on equity investments is 15% and the stock is expected to be worth Rs. 90 one year from now?**

**a. Rs. 60.00**

b. Rs. 68.12

c. Rs. 78.26

d. Rs. 80.87

b. Rs. 68.12

c. Rs. 78.26

d. Rs. 80.87

**Ans - d**

Explanation:

0.15 = {(90-x)+3}/x

0.15x = 93-x

1.15x = 93

x = 93/1.15

x = 80.87

6.

Explanation:

0.15 = {(90-x)+3}/x

0.15x = 93-x

1.15x = 93

x = 93/1.15

x = 80.87

6.

**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

b. More than the cost of capital

c. Half of the cost of capital

d. No relevance

**Ans - b**

7.

7.

**Calculating future value of cash flows is not known as ......**

(i) Compounding, (ii) Discounting, (iii) Hedging

(i) Compounding, (ii) Discounting, (iii) Hedging

**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**

8.

8.

**A sum of money at simple interest amounts to Rs. 2,800 in 2 years and to Rs. 3,250 in 5 years. Find the sum and the rate of interest.**

**a. Rs. 2,500; 5%**

b. Rs. 2,500; 6%

c. Rs. 3,000; 5%

d. Rs. 3,000; 6%

b. Rs. 2,500; 6%

c. Rs. 3,000; 5%

d. Rs. 3,000; 6%

**Ans - b**

9.

9.

**A sum of Rs. 26,000 is lent out in two parts in such a way that the interest on one Part @ 10% for 5 years is equal to the on another part @ 9% for 6 years. The sum lent out at 10% is......**

**a. Rs. 10,500**

b. Rs. 11,500

c. Rs. 12,500

d. Rs. 13,500

b. Rs. 11,500

c. Rs. 12,500

d. Rs. 13,500

**Ans - d**

10.

10.

**Cost of Car is Rs. 300,000, Depreciation Rate is 10% on WDV. What is the book value of car after 3 years ?**

**a. 210,000**

b. 220,000

c. 214,300

d. 218,700

b. 220,000

c. 214,300

d. 218,700

**Ans - d**

11.

11.

**The concept of deriving the rate of currency A in terms of currency C through currency B is called as**

**a. Direct Quote**

b. Indirect Quote

c. Chain Rule

d. Arbitrage

b. Indirect Quote

c. Chain Rule

d. Arbitrage

**Ans - c**

12.

12.

**If a bond is purchased at its current market price and if the coupon interest is received, the rate of return on it is measured by ......**

**a. Yield to maturity of bond**

b. Current yield of bond

c. Current present value of bond

d. Future yield of bond.

b. Current yield of bond

c. Current present value of bond

d. Future yield of bond.

**Ans - b**