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
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. 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
a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)
Ans - a
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. If 1 year discount is 0.8333, what is the discount rate?
a. 10%
b. 20%
c. 30%
d. 15%
Ans - b
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
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
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%
Ans - c
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
a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)
Ans - b
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.
Ans - d
9. The exchange of currencies takes place on the date of the deal in
a. SPOT
b. TOM
c. Cash
d. Forward
Ans - c
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
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?
a. Rs. 200,000
b. Rs. 170,000
c. Rs. 140,000
d. Rs. 50,000
Ans - c
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
Ans - d
a. 1:2
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. 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
a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)
Ans - a
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. If 1 year discount is 0.8333, what is the discount rate?
a. 10%
b. 20%
c. 30%
d. 15%
Ans - b
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
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
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%
Ans - c
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
a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)
Ans - b
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.
Ans - d
9. The exchange of currencies takes place on the date of the deal in
a. SPOT
b. TOM
c. Cash
d. Forward
Ans - c
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
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?
a. Rs. 200,000
b. Rs. 170,000
c. Rs. 140,000
d. Rs. 50,000
Ans - c
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
Ans - d