## SOLVED JAIIB COMBINED PAPER 18:

**1. What will the ratio of simple interest earned by certain amount at the same rate of interest for 4 years and that for 10 years.**

**a. 1:2**

b. 2:1

c. 2:5

d. 2:3

b. 2:1

c. 2:5

d. 2:3

**Ans - c**

**Explanation :**

**Let the principal be P and rate be R**

**then**

**Ratio = [(P∗R∗4/100):(P∗R∗10/100)]**

= 4 PR : 10 PR

= 4:10

= 2:5

2.

= 4 PR : 10 PR

= 4:10

= 2:5

2.

**For a project, the difference between the sum of the present value of cash flows of the project and cash outlays for financing the project is not its ......**

(i) Future value,

(ii) Internal rate Is return ,

(iii) Net present value

(i) Future value,

(ii) Internal rate Is return ,

(iii) Net present 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 - a**

3.

3.

**A bond holder of a company has one of the following relationship with It. Identify**

**a. shareholder**

b. depositor

c. creditor

d. employee

Ans - c

4.

b. depositor

c. creditor

d. employee

Ans - c

4.

**If 1 year discount is 0.8333, what is the discount rate?**

**a. 10%**

b. 20%

c. 30%

d. 15%

b. 20%

c. 30%

d. 15%

**Ans - b**

5.

5.

**You will be receiving Rs. 100000 at the end of each year for the next 15 years. If the current discount rate for such a stream of cash is 9%, find the present value of cash flow.**

**a. 800669**

b. 806069

c. 860609

d. 866009

b. 806069

c. 860609

d. 866009

**Ans - b**

**Solution:**

**Since 100000 is like EMI. So, to find P, we use the formula of EMI**

**The formula of EMI =**

P * R * (1 + R)^T ÷ { (1 + R)^T - 1 }

100000 = P × 0.09 × 1.09^15 ÷ (1.09^15 – 1)

100000 = P × 0.09 x 3.64248 ÷ 2.64248

264248 = P x 0.32782

P = 806069

P * R * (1 + R)^T ÷ { (1 + R)^T - 1 }

100000 = P × 0.09 × 1.09^15 ÷ (1.09^15 – 1)

100000 = P × 0.09 x 3.64248 ÷ 2.64248

264248 = P x 0.32782

P = 806069

**This can be done with PV (OA) Present Value Ordinary Annuity too.**

**6.**

**What annual rate of simple interest was paid if Rs. 10000 earned Rs. 1100 as interest in 2 Years and 9 months?**

**a. 2%**

b. 3%

c. 4%

d. 5%

b. 3%

c. 4%

d. 5%

**Ans - c**

7.

7.

**The holding period for which interest rate risk disappears is not known as ......**

(i) Safety of bond,

(ii) Duration of the bond,

(iii) Maturity of the bond

(i) Safety of bond,

(ii) Duration of the bond,

(iii) Maturity of the bond

**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.

**Which of the following is not true**

**a. Depreciation is an expense charged to the P & L a/c.**

b. Depreciation is not a part of the operating costs.

c. Assets that are depreciated are tangible assets.

d. Depreciation is like an insurance expense.

b. Depreciation is not a part of the operating costs.

c. Assets that are depreciated are tangible assets.

d. Depreciation is like an insurance expense.

**Ans - d**

9.

9.

**The exchange of currencies takes place on the date of the deal in**

**a. SPOT**

b. TOM

c. Cash

d. Forward

b. TOM

c. Cash

d. Forward

**Ans - c**

10.

10.

**If Rs. 50000 is lent at 10% interest, on which one the interest will be lowest?**

**a. Yearly compounding**

b. Half-Yearly compounding

c. Quarterly compounding

d. Monthly compounding

b. Half-Yearly compounding

c. Quarterly compounding

d. Monthly compounding

**Ans - a**

11. A capital equipment costing Rs. 200,000 today has Rs. 50,000 salvage value at the end of 5 years. If the straight line depreciation method is used, what is the book value of the equipment at the end of 2 years?

11. A capital equipment costing Rs. 200,000 today has Rs. 50,000 salvage value at the end of 5 years. If the straight line depreciation method is used, what is the book value of the equipment at the end of 2 years?

**a. Rs. 200,000**

b. Rs. 170,000

c. Rs. 140,000

d. Rs. 50,000

b. Rs. 170,000

c. Rs. 140,000

d. Rs. 50,000

**Ans - c**

12.

12.

**What is the Present Value of Rs. 115,000 to be received after 1 year at 10%?**

**a. 121,000**

b. 100,500

c. 110,000

d. 104,545

b. 100,500

c. 110,000

d. 104,545

**Ans - d**