## Calculation of Interest and Annuities

JAIIB - Accounting & Finance
Module A : Business Mathematics and Finance

Calculation of Interest and Annuities

1.  Calculation of Simple Interest (SI) and Compound Interest (CI)

a.  Simple Interest (SI) / Flat rate interest is calculated only on the principal amount (initial amount).
Formula for calculating SI is :
SI = Principal (P) x Rate (R) x Time (T)  [N.B - here Rate is expressed in fraction, e.g., 0.05, instead of 5 %]

E.g., Principal amount of Rs. 5,000 with 10 % annual simple interest rate, will earn total interest in 3 years = 5,000 x 0.1 x 3 = Rs. 1,500;
whereas, it will earn total interest in 3 months = 5,000 x 0.1 x 3/12 = Rs. 125

b.  Compound Interest (CI) / Cumulative Interest is calculated both on the principal amount and prior interest earned.
Formula for calculating CI is:
CI = Amount (A) - Principal (P),
where, A = P(1+R/n)^nT  [N.B - here Rate is expressed in fraction, e.g., 0.05, instead of 5 %]

Note - n is the number of compounding per year, e.g., for yearly compounding n=12/12=1, for half-yearly compounding n=12/6=2, for quarterly compounding n=12/3=4, for monthly compounding n=12/1=12, etc.

E.g., Principal amount of Rs. 5,000 with 10 % annual compound interest rate, will earn total interest in 3 years = [ 5,000 x (1 + 0.1) ^ 3 ] - 5,000 = Rs. 1,655

But, if it is, say, quarterly compounding, then CI for 3 years is = [ 5,000 x (1 + 0.1/4) ^ (4 x 3) ] - 5,000 = Rs. Rs. 6724.44 - 5000 = Rs. 1724.44

2.  Calculation of Equated Monthly Installments (EMI)

Equated Monthly Installments (EMI) is the amount a borrower pays every month for his loan. It is a combination of interest and principal payment, where the total monthly amount is such calculated, that it remains constant (i.e., equated) throughout the repayment period.

Formula : EMI = [PR(1+R)^n] / [(1+R)^n - 1], (to remember EMI=PRX/(X-1), where X=(1+R)^n)
Here, P=Principal amount,
R=interest (compound) rate per month (NOTE: if annual intt rate is 10 %, then R=10/(12x100), i.e., conversion to monthly is necessary)
N=no. of monthly installments
X=compounding factor=(1+R)^n

For example, suppose a loan of Rs. 5 lakh is to be repaid over 30 years in EMI, with 10 % annual interest. Here, the monthly EMI for this loan will be calculated as follows -
i.  First calculate R (convert to monthly intt. rate) = 10/(12x100) % = 0.00833 (approx)
ii.  Then calculate no. of monthly installments, n = 30 years x 12 = 360
iii.  Calculate compounding factor X = (1+R)^n = (1+0.00833)^360 = 19.8138 (approx)
iv.  EMI = PRX / (X-1) = (500000 x 0.00833 x 19.8138) / 18.8138 = 4386.38 = 4387 (approx)

EMI for this loan will be approx Rs. 4,387.

3.  Fixed and Floating Interest Rates

a.  Fixed Interest rate on a loan, means that the interest rate will be fixed / constant, either for the entire term of the loan, or for part of the total term of the loan.

b.  Floating / Variable Interest rate on a loan, means that the interest rate can be changed (increase or decrease) depending on the market conditions.

Comparison -
• If market condition is favorable, then the borrower enjoys reduced rate of interest for Floating interest loans, whereas he cannot enjoy the benefit if he avails Fixed interest loans.
Similarly, if market condition deteriorates, he is not affected, if he avails Fixed interest loans, whereas he has to pay more for floating interest loans.
• Fixed interest loans bring a sense of certainty and security. It is good for those borrowers, who are good at budgeting.
• Often fixed interest rates are higher than the floating interest loans.

4.  Calculation of Annuities

Before starting with Annuities, first understand the time value of money.
Present Value (PV) of money is the value at the current point of time. Whereas, a given sum of money "worth" more at a specified time in the future, assuming a certain interest rate. This is known as Future Value (FV) of money.

Assuming that the interest rate and number of periods remain constant, PV and FV vary jointly. For example, if PV increases, FV will increase too, and vice versa. There is a relationship between these two (with the above assumption), PV = FV x DF

here DF is known as Discounting Factor. Note that to get the present value of a certain sum of money, we have to discount (e.g., filter out the interests gained) the future value of that sum of money. This process is known as Discounting.

Formula for DF is DF = 1 / (1+R)^n
where R=rate of interest, and n=no. of period
[ Note, that we have taken Compounding Factor X=(1+R)^n while calculating EMI. Discounting Factor (DF) is reciprocal of the compounding factor]

Therefore, now we have the relations,
PV = FV x DF FV = PV / DF, where DF = 1 / (1+R)^n
or, PV = FV / X; FV = PV x X, where X = (1+R)^n

(take any one of the above formula for remembering)

Now, that you have clear concept of Present Value (PV) and Future Value (FV) of money, we can start with Annuity.

An Annuity is a series of equal/fixed payments/receipts at a regular interval, over a fixed period. For example, recurring deposit of Rs. 1000 every month, or LIC payment of Rs. 1000 every year for 10 years, etc.

Note that, payments can be made weekly, monthly, quarterly, yearly, or at any other interval of time.

Types of Annuity - There are 2 types in terms of valuation of annuity:
(NOTE - Basic classification of Annuity is - Ordinary Annuity & Annuity Due)

a.  Annuity Certain / Guaranteed Annuity - If the number of payment is known in advance, then it is known as Annuity Certain.

Annuity Certain is of 3 types -

i.  Ordinary Annuity / Annuity Immediate - If the payments are made at the end of the time period. In this case, before the payment is made, interest is accumulated or earned.

Periods:    0___1___2___ ... ___n  (Payments in bold, i.e., 1, 2, ... n)

Formula for Ordinary Annuity,
FV of Ordinary Annuity = C(X-1)/R, where X=(1+R)^n
Here C=cash flow per period, R=interest rate and n=number of payments

To get PV of Ordinary Annuity, use the formula already discussed, PV=FV/X (i.e., divide FV by compounding factor), or PV=FVxDF (i.e., multiply FV by discounting factor)

ii.  Annuity Due - If the payments are made at the beginning of each period. In this case, each annuity payment is allowed to compound for one extra period (note - paying before time!)

Periods:    0___1___2___ ... ___n  (Payments in bold, i.e., 0, 1, 2, ... n)

Note that, since each payment in this series is made 1 period earlier, we have to discount the formula for 1 period. We get the following formula for Annuity Due,

FV of Annuity Due = FV of Ordinary Annuity x (1+R) = [C(X-1)/R] x (1+R)
Similarly, PV of Annuity Due = FV of Annuity Due / X = FV of Annuity Due x DF

Note -

• FV will be greater than PV (assuming interest is earned). Therefore, to calculate PV from FV, we have to divide FV by compounding factor, (i.e., multiply FV by discounting factor). It will make PV lesser than the FV. And reverse while calculating FV from PV.
• Try remembering the formula, FV of Ordinary Annuity = C(X-1)/R, and then use the following formula to get the others -
• PV of Ordinary Annuity = FV of Ordinary Annuity / X
• FV of Annuity Due = FV of Ordinary Annuity x (1+R) (multiply by 1+R, since payment made 1 period earlier)
• PV of Annuity Due = FV of Annuity Due / X

iii.  Perpetuity - If the payments continue forever

b.  Life Annuities - If the payment is paid till the annuitant is alive. For example, life insurance, etc.

5.  Amortization of a Debt
Amortization is the process of decreasing an amount over a period. Amortization of a debt/loan is the process by which loan principal decreases over the life of a loan, typically an amortizing loan.

With each payment is made, a portion of the payment is applied towards reducing the principal, and another portion towards paying the interest on the loan.

6.  Sinking Funds
Sinking Fund is a fund into which a company sets aside money over a period of time, in order to fund a future capital expense, or repayment of a long-term debt.

Suppose a company wants a fixed amount of Rs. 50 crore in 5 years. It can deposit an amount (say, C) every year (i.e., annuity) with a bank, which gives interest rate of 8 % annually. This becomes Rs. 50 crore after 5 years, and can be used for repaying a debt, or any other purpose. This type of fund is known as Sinking Fund.

Note we can calculate C, as interest rate (R), FV(=Rs. 5 crore), and number of period are known.

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## Day 60 - Questions

Day 60 - New Social Security Schemes

( New Social Security Schemes, Beti Bachao Beti Padhao Initiative )

Recommended Study links - (Go through these topics before attempting MCQs)

1.  Which of the following is a newly launched pension scheme of government of India?
a.  PMJJBY
b.  PMJDY
c.  PMSBY
d.  APY

2.  What is the premium for Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)?
a.  Rs. 300 / annum
b.  Rs. 330 / annum
c.  Rs. 350 / annum
d.  None of the above

3.  What is the premium for Pradhan Mantri Suraksha Bima Yojana (PMSBY)?
a.  Rs. 100 / annum
b.  Rs. 150 / annum
c.  Rs. 10 / annum
d.  Rs. 12 / annum

4.  Atal Pension Yojana (APY) specially focuses on -
a.  organized sector
b.  IT-sector
c.  unorganized sector
d.  banking sector

5.  Which of the following provides accidental death-cum-disability cover of Rs. 2 lakh?
a.  PMJJBY
b.  PMJDY
c.  PMSBY
d.  APY

6.  According to the 2011 census, which of the following is the correct Child Sex Ratio (CSR) in India?
a.  945 girls per 1000 boys
b.  927 girls per 1000 boys
c.  918 girls per 1000 boys
d.  None of the above

7.  Which of the following scheme of government is/are specially focused on girl child in India?
a.  Sukanya Samridhi Yojana
b.  Saksham scheme
c.  Swabhiman scheme
d.  Swavalamban scheme

8.  What is the maximum age of girl child allowed for opening Sukanya Samriddhi Account?
a.  8 years
b.  10 years
c.  12 years
d.  18 years

9.  Beti Bachao Beti Padhao is an initiative of -
a.  Ministry of Women and Child Development
b.  Ministry of Health and Family Welfare
c.  Ministry of Human Resource Development
d.  All of the above

10.  Beti Bachao Beti Padhao initiative was started with initial corpus of -
a.  Rs. 50 crore
b.  Rs. 100 crore
c.  Rs. 500 crore
d.  Rs. 1000 crore

With this post (Day 60) - Bankoncepts Study Plan 2015-16 is concluded. Hope you find this Banking Awareness plan helpful!

Happy learning!

Following are the important links for Bankoncepts Study Plan 2015-16

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## Day 59 - Questions

Day 59 - Pre-2005 and MG-series Banknotes

( Pre-2005 Banknotes, MG-series Banknotes )

Recommended Study links - (Go through these topics before attempting MCQs)

1.  Which of the following is not a banknote series issued in India?
a.  Ashoka Pillar Banknotes issued from 1949
b.  Mahatma Gandhi (MG) Series-1996 Banknotes issued from 1996
c.  Mahatma Gandhi (MG) Series-2005 Banknotes issued from 2005
d.  Mahatma Gandhi (MG) Series-2012 Banknotes issued from 2012

2.  Which of the following series of banknotes bear the year of printing on the reverse side?
a.  Ashoka Pillar Series banknotes
b.  MG-series 1996 banknotes
c.  MG-series 2005 banknotes
d.  All of the above

3.  Which of the following is true regarding recent banknote circulation policy of RBI in India?
a.  Withdrawal of Pre-2005 banknotes
b.  Withdrawal of Pre-2012 banknotes
c.  Withdrawal of Pre-2010 banknotes
d.  Withdrawal of Pre-1996 banknotes

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## Day 58 - Questions

Day 58 - Financial Ministry and Financial Market Entities

( Finance Ministry, Financial Market Entities )

Recommended Study links - (Go through these topics before attempting MCQs)

1.  Which of the following is not a department of Finance Ministry?
a.  Department of Economic Affairs
b.  Department of Public Enterprises
c.  Department of Expenditure
d.  Department of Disinvestment

2.  Which of the following is not a function of Department of Economic Affairs (DEA)?
a.  Preparation of General Budget (excluding Railway Budget)
b.  Formulation of Macroeconomic policies
c.  Indian currency production
d.  Governing Direct and Indirect Taxes

3.  Who is the Economic Affairs Secretary of India (as of June 18, 2015)?
a.  Arvind Mayaram
c.  Rajiv Mehrishi
d.  Raghuram Rajan

4.  Which of the following department governs all banks, insurance, pensions, etc. provided by government agencies or private corporations?
a.  Department of Economic Affairs
b.  Department of Financial Services
c.  Department of Revenue
d.  None of the above

5.  Who is the Financial Services Secretary of India (as of June 18, 2015)?
a.  Arvind Mayaram
c.  Rajiv Mehrishi

6.  Who is the first Finance Minister of independent India?
a.  Liaquat Ali Khan
b.  R.K.Shanmukham Chetty
c.  Morarji Desai
d.  C.D.Deshmukh

7.  Who is the Finance Secretary of India (as of June 18, 2015)?
a.  Arvind Mayaram
c.  Rajiv Mehrishi
d.  Raghuram Rajan

8.  What is the main function of Primary Dealers (PD)?
a.  Dealing with government securities, both in Primary and Secondary Market
b.  Dealing with public funds
c.  Dealing with disinvestment
d.  None of the above

9.  Which of the following is true regarding Brokers?
a.  Brokers are needed to be approved by Capital market regulator
b.  Brokers act as an intermediary between buyers and sellers of securities of Capital Market
c.  Brokers help build-up an order book, carry out price discovery and are responsible for broker's contracts being honored
d.  All of the above

10.  Depository Participants maintain demat accounts of individual customers. Which of the following maintains demat accounts of Depository Participants?
a.  Government
b.  RBI
c.  Depositories
d.  Individual Banks

11.  Which of the following is correct difference between Brokers and Depository Participants?
a.  Brokers are members of stock exchanges; DPs are members of Depositories
b.  Brokers link buyers and sellers of securities through Stock Exchanges; DPs keep securities in safe electronic (demat) form, and act as the custodian of securities
c.  Brokers open trading account; DPs open demat account
d.  All of the above

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## Day 57 - Questions

Day 57 - Interest Rate Swap, Disinvestment

( Interest Rate Swap, Disinvestment )

Recommended Study links - (Go through these topics before attempting MCQs)

1.  Interest Rate Swap is a financial instrument of -
a.  Money Market
b.  Capital Market
c.  Derivatives Market
d.  None of the above

2.  Which of the following is true regarding Interest Rate Swap (IRS)?
a.  Two parties exchange interest rate payments between them
b.  One party wants to receive payment in variable interest rate
c.  Other party wants to receive payment in fixed interest rate
d.  All of the above

3.  What is the purpose of Interest Rate Swap agreement?
a.  Hedging an investment
b.  Gaining tax benefit from government
c.  Change the interest rate of bank deposits
d.  All of the above

4.  Disinvestment can be though as -
a.  The conversion of money into securities / assets
b.  The conversion of securities / assets into money
c.  Both (a) and (b)
d.  None of the above

5.  Which of the following is true regarding disinvestment?
a.  Disinvestment is the action of an organization / government to sell its assets (shares / other securities / subsidiary) to raise money
b.  Disinvestment has the opposite effect of Investment
c.  Disinvestment occurs in Secondary Market
d.  All of the above

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IBPS CWE RRB IV (2015-16) Notification

IBPS
has released the notification of RRB IV (2015-16).

Major change - Common Interview is introduced in RRB IV (up to previous year respective RRBs conducted their own Interview, and shortlisted final selected candidates accordingly)

Application Date - July 8 - 28, 2015
Exam Date - September 2015 (tentatively)

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## Day 56 - Questions

Day 56 - Purchasing Power Parity, Subsidy Leakage, JAM Trinity

( Purchasing Power Parity, Subsidy Leakage, JAM Trinity )

Recommended Study links - (Go through these topics before attempting MCQs)

1.  Which of the following is true regarding Purchasing Power Parity?
a.  The exchange rate of a currency with another currency is in equilibrium when their domestic purchasing power are equivalent at that exchange rate
b.  The exchange rate of a currency with another currency is in equilibrium when their domestic purchasing power are different at that exchange rate
c.  Purchasing power parity has no effect in exchange rate
d.  None of these

2.  If the same product/service can be sold in two different countries with no restrictions on sale and transport costs are zero, the product/service's price should be the same in both countries. This theory is known as -
a.  Market Parity Theory
b.  The Law of One Price
d.  None of the above

3.  Subsidy leakage means -
a.  Government subsidy is reaching to the intended beneficiary
b.  Government subsidy is not reaching to the intended beneficiary
c.  Government subsidy is stopped by the government
d.  None of the above

4.  Which of the following could help in reducing the Subsidy Leakage problem?
a.  PAHAL Scheme for LPG
b.  Direct Benefit Transfer (DBT) schemes
c.  Jan-Dhan Yojana Accounts
d.  All of the above

5.  Which of the following is included in JAM Trinity?
a.  Jan Dhan Yojana
c.  Mobile Numbers
d.  All of the above

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## Day 55 - Questions

Day 55 - Recession, Subprime Lending, DEAF scheme

( Recession, Subprime Lending, DEAF scheme )

Recommended Study links - (Go through these topics before attempting MCQs)

1.  In a recession, GDP -
a.  grows rapidly
b.  grows negatively
c.  grows slowly
d.  doesn't grow

2.  Which of the following is not an effect of recession?
a.  Drop in Stock Market
c.  Increased employment
d.  Social effects, like low living standards, low wages, etc.

3.  If a bank provides loan to non-creditworthy borrowers, then it is known as -
a.  retail lending
b.  subprime lending
c.  prime lending
d.  corporate lending

4.  Which of the following can trigger recession in an economy?
a.  subprime lending
b.  political instability of the country
c.  falling oil prices
d.  all of the above

5.  What is the full form of DEAF?
a.  Depositor Education and Assumption Fund
b.  Depositor Education and Awareness Fund
c.  Depositor Education and Association Fund
d.  Depositor Education and Application Fund

6.  Which of the following is true regarding DEAF scheme?
a.  All unclaimed amounts in the banks need to be transferred within 1 month after becoming 5 years default to the DEAF Fund
b.  All unclaimed amounts in the banks need to be transferred within 3 months after becoming 5 years default to the DEAF Fund
c.  All unclaimed amounts in the banks need to be transferred within 3 months after becoming 10 years default to the DEAF Fund
d.  None of the above

7.  What is the objective of DEAF scheme?
a.  To provide reflexive loans to the borrowers
b.  To promote depositor interest, like educating them, or creating awareness among them
c.  To add to the Consolidated Fund of India, and to be used for nation building
d.  All of the above

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## Day 54 - Questions

Day 54 - Depository Receipts ADR, GDR

( Depository Receipts - ADR, GDR )

Recommended Study links - (Go through these topics before attempting MCQs)

1.  Suppose, a company publicly listed in New York Stock Exchange (NYSE) wants to raise money from India. It may list its securities (stocks or equities) in Bombay Stock Exchange (BSE). Now Indian investors can buy the securities in the form of -
a.  Fixed Deposits
b.  Depository Receipts
c.  Bullion
d.  None of the above

a.  All-India Depository Receipts
b.  American Domestic Receipts
c.  American Depository Receipts
d.  All-India Domestic Receipts

3.  Expand GDR
a.  Global Domestic Reports
b.  Global Depository Receipts
c.  General Depository Receipts
d.  None of the above

4.  Which of the following is/are correct steps for issuance of Depository Receipts?
a.  The shares of the foreign company (which the DR represents) are delivered and deposited with the custodian bank (bank that facilitates the company's DR)
b.  On receipt of the delivery of shares, the custodian bank creates DR and issues to investors in the country
c.  These DRs are then listed and traded in the local stock exchange of the investors' country
d.  All are correct

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## Day 53 - Questions

Day 53 - Banking Ombudsman

( Banking Ombudsman )

Recommended Study links - (Go through these topics before attempting MCQs)

1.  The purpose of Banking Ombudsman is -
a.  credit resolution of individuals
b.  customer complaints resolution
c.  forex management
d.  human resource management of banks

2.  Which of the following banks are covered under the Banking Ombudsman scheme?
a.  Scheduled Commercial Banks (SCBs)
b.  Regional Rural Banks (RRBs)
c.  Scheduled Primary Cooperative Banks
d.  All of the above

3.  Which of the following is true regarding Banking Ombudsman?
a.  Ombudsman scheme is first introduced in 1995 under Section 35A of Banking Regulation Act, 1949
b.  Ombudsman is a quasi-judicial authority, who has legal power to summon both the parties (bank and its customer) to facilitate the resolution of complaint through mediation
c.  Currently, there are 15 Banking Ombudsmen offices in India
d.  All are true

4.  If a customer is not satisfied with the resolution provided by Ombudsman, he can approach -
a.  Governor of RBI
b.  Deputy-governor of RBI
c.  CMD of respective banks
d.  Finance Minister of India

5.  Which of the following needs to be satisfied before filing a complaint in Ombudsman scheme?
a.  One month passes after filing complaint in bank
b.  Bank rejects the complaint of the customer
c.  Customer is not satisfied with the reply from the bank
d.  Any of the above

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## Day 52 - Questions

Day 52 - Line of Credit, Letter of Credit

( Line of Credit, Letter of Credit )

Recommended Study links - (Go through these topics before attempting MCQs)

1.  Line of Credit is generally provided to business house on which type of account?
a.  Savings Account
b.  NRO Account
c.  Demat Account
d.  Cash Credit Account

2.  Which of the following is not true regarding Line of Credit?
a.  Line of Credit is given to the corporate for business purpose
b.  Line of Credit is a loan/advance facility (credit) with a max. limit (line)
c.  Line of Credit is generally provided in Cash Credit (CC) accounts
d.  No collateral is needed by the corporate to avail the Line of Credit facility

3.  Letter of Credit is a facility used for the purpose -
a.  Loan / advance for SMEs
b.  Letter for guarantee of payment in international trade
c.  Letter from government to avail credit by the farmers
d.  None of these

4.  Which of the following is related with Letter of Credit?
a.  Line of Credit
c.  Bill Discounting
d.  NOSTRO accounts

5.  Which of the following is correct difference/s between Letter of Credit and Bank Guarantee?
a.  In Letter of Credit, amount is paid only if the contract is satisfied; whereas in Bank Guarantee, amount is paid only if the contract is breached
b.  Letter of Credit insures a transaction proceeds as planned; Bank Guarantee insures from loss or damage due to non-performance by the other party
c.  Both (a) and (b)
d.  None of the above

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## Day 51 - Questions

Day 51 - NOSTRO, VOSTRO, LORO

( NOSTRO, VOSTRO, LORO Accouints )

Recommended Study links - (Go through these topics before attempting MCQs)

1.  Which of the following is true regarding NOSTRO Accounts?
a.  Domestic bank account maintained in a foreign country with a foreign bank
b.  Foreign bank account maintained in our country with a domestic bank
c.  Third party bank account maintained in a foreign country with a foreign bank
d.  None of the above

2.  Which of the following is true regarding VOSTRO Accounts?
a.  Domestic bank account maintained in a foreign country with a foreign bank
b.  Foreign bank account maintained in our country with a domestic bank
c.  Third party bank account maintained in a foreign country with a foreign bank
d.  None of the above

3.  Which of the following is true regarding LORO Accounts?
a.  Domestic bank account maintained in a foreign country with a foreign bank
b.  Foreign bank account maintained in our country with a domestic bank
c.  Third party bank account maintained in a foreign country with a foreign bank
d.  None of the above

4.  Which of the following best suits with NOSTRO Accounts?
a.  "Out account with you"
c.  "Their account with them"
d.  None of the above

5.  Which of the following best suits with VOSTRO Accounts?
a.  "Out account with you"
c.  "Their account with them"
d.  None of the above

6.  Which of the following best suits with LORO Accounts?
a.  "Out account with you"
c.  "Their account with them"
d.  None of the above

7.  Which of the following account is/are generally maintained in Indian currency (INR)?
a.  NOSTRO
b.  VOSTRO
c.  LORO
d.  Both (a) and (c)

8.  Which of the following account is/are generally maintained in foreign currencies?
a.  NOSTRO
b.  VOSTRO
c.  LORO
d.  Both (a) and (c)

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## Day 50 - Questions

Day 50 - NRI Accounts

( NRI Accounts - NRE, NRO, FCNR(B) )

Recommended Study links - (Go through these topics before attempting MCQs)

1.  Expand NRO Account
a.  Non Residential Ordinary Account
b.  Non Residential Operated Account
c.  Non Residential Operation Account
d.  None of the above

2.  NRO accounts are -
a.  Rupee (INR) dominated
b.  US Dollar (USD) dominated
c.  Dominated by the currency of the country where the NRI will reside
d.  None of the above

3.  Select the purpose for which NRO accounts are opened?
a.  To park overseas savings remitted to India
b.  To maintain account in foreign currency
c.  To park Indian earnings, like rent, Indian salary, dividends, etc.
d.  None of the above

4.  Expand NRE Account
a.  Non Resident Earner Account
b.  Non Resident External Account
c.  Non Resident European Account
d.  Non Resident Entry Account

5.  NRE accounts can be opened by -
a.  Depositing foreign currency
b.  Depositing traveler's cheque
c.  Depositing Indian currency (INR)
d.  (a) or (b)

6.  Select the purpose for which NRE accounts are opened?
a.  To park overseas savings remitted to India
b.  To maintain account in foreign currency
c.  To park Indian earnings, like rent, Indian salary, dividends, etc.
d.  None of the above

7.  What is the full form of FCNR(B) Account?
a.  Foreign Currency Non-Resident Business Account
b.  Free Currency Non-Resident Business Account
c.  Fast Convertible Non-Resident Bank Account
d.  Foreign Currency Non-Resident Bank Account

8.  Which type of facility is provided in FCNR(B) accounts?
a.  Savings account facility
b.  Current account facility
c.  Fixed / Term account facility with 1 to 5 years maturity period
d.  All of the above

9.  FCNR(B) account is maintained in -
a.  Indian currency
b.  Foreign currency
c.  Either (a) or (b)
d.  None of the above

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## Day 49 - Questions

Day 49 - LIBOR, MIBOR, MIBID

( LIBOR, MIBOR, MIBID )

Recommended Study links - (Go through these topics before attempting MCQs)

1.  Which of the following is/are Inter-bank offer rates?
a.  LIBOR
b.  MIBOR
c.  HIBOR
d.  All of the above

2.  Expand LIBOR -
a.  Liquidity Inter-Bank Offer Rate
b.  London Inter-Bank Offer Rate
c.  Liability Inter-Bank Offer Rate
d.  None of the above

3.  Select the odd one -
a.  LIBOR
b.  MIBOR
c.  MIBID
d.  TIBOR

4.  Which of the following is/are Inter-Bank Offer Rate of Indian origin?
a.  LIBOR
b.  MIBOR
c.  MIBID
d.  Both (b) and (c)

5.  While MIBOR is a benchmark rate for offering loans to other banks, which of the following is a benchmark rate for willing to take loans in India?
a.  LIBOR
b.  TIBOR
c.  MIBID
d.  None of the above

6.  Expand MIBID
a.  Major Inter-Bank Bid Rate
b.  Mumbai Inter-Bank Bid Rate
c.  Mumbai Inter-Bank Investment Deposit Rate
d.  Major Inter-Bank Investment Deposit Rate

7.  Which of the following products are linked with LIBOR/MIBOR?
a.  Call Money, Notice Money, Term Money
b.  Interest Rate Swaps (IRS)
c.  Forward Rate Agreements, Future Interest Rate
d.  All of the above

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## SBI PO 2015 Preliminary Exam Admit Card

SBI PO 2015 Preliminary Exam Admit Card

SBI has released Admit Card / Call Letter of Preliminary Exam (Tier I) for Probationary Officer (PO). Download call letter from the following link -

## Bankoncepts Android App

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## Day 48 - Questions

Day 48 - Inflation Targeting

( Inflation Targeting )

Recommended Study links - (Go through these topics before attempting MCQs)

1.  Inflation targeting refers to -
a.  explicit declaration of central bank to keep inflation within the limit
b.  explicit declaration of government to keep inflation within the limit
c.  internal target of central bank to keep inflation within the limit, but without explicit declaration
d.  internal target of government to keep inflation within the limit, but without explicit declaration

2.  Inflation Targeting in India is based on -
a.  WPI-based Inflation
b.  CPI-based Inflation
c.  PPI-based Inflation
d.  None of the above

3.  What is the Inflation target of RBI for the period up to January 2016?
a.  below 4 %
b.  below 5 %
c.  below 6 %
d.  none of the above

4.  What is the Inflation target of RBI for the period starting from FY 2016-17?
a.  4 % (+/- 2 %)
b.  4 % (+/- 1 %)
c.  3 % (+/- 2 %)
d.  3 % (+/- 1 %)

5.  Inflation Targeting of RBI is recommended by which of the following Committee?
a.  Usha Thorat committee
b.  Urjit Patel committee
c.  Chakravarty committee
d.  none of the above

Note - Do not refer any source while answering the questions. You can comment in the Comment Section below.

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