Question 1

Mr. Kumar is a 40 year old NRI working abroad for past 5years. He invests Rs. 50, 000/- p.a. for past 5 years and wants to continue until his return to India. He plans to return to India after 10 years from now and enjoy his life back home. Inflation is expected to be 4% for next 30 years and his investment earns 6% interest. His expected life expectancy is 70 years. What would be his corpus at the time of return to India, and what amount he can with draw per month for his household expenses?

Options :

A : Rs. 12,14,279/- and Rs. 6,358

B : Rs. 11,63,798/- and Rs. 5,845

C : Rs. 13,12,008/- and Rs. 7,008

D : Rs. 12,14,279/- and Rs. 9,554

Answer: B

Question 2

Default risk is

Options :

A : Borrower may not pay principal in time

B : Borrower may not be able to sell the security easily

C : Fluctuation in price due to change in interest rate

D : All of the above

Answer: A

Question 3

Ram born in 1950 has a life expectancy at birth of 65 years. Sita his wife born in 1955 has a life expectancy at birth of 70 years. Assuming that the life expectancies have not changed. Ram is planning to buy an annuity to be paid to him or his wife till anyone of them is alive. Assuming Ram will retire on attaining age 58 i.e. in 2008, what should be the time period of the annuity?

Options :

A : 10 years

B : 12 years

C : 7 years

D : 17 years

Answer: D

Question 4

Interest on savings bank accounts is paid on _______.

Options :

A : lowest balance between 10th and 30th of the month

B : lowest balance between 10th and the end of the month

C : daily balance during the month

D : lowest balance between 1st and 10th of the month

Answer: C

Question 5

The markets for funds traded in currencies other than the currency of the trading country are referred to as

Options :

A : off-shore banking centres.

B : international financial centres.

C : the world market.

D : Eurocurrency markets.

Answer: D

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