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CBSE Questions for Class 11 Commerce Applied Mathematics Basics Of Financial Mathematics Quiz 2 - MCQExams.com
CBSE
Class 11 Commerce Applied Mathematics
Basics Of Financial Mathematics
Quiz 2
The _______ is the percentage of a sum of money charged for its use.
Report Question
0%
Principal
0%
Interest
0%
Rate of interest
0%
Amount
Explanation
The
rate of interest
_
is the percentage of a sum of money charged for its use.
Determine the principal when time
=
2
years, interest
=
Rs.
1000
; rate
=
2
%
p.a.
Report Question
0%
10000
0%
20000
0%
15000
0%
25000
Explanation
Here, time
=
2
years, interest
=
Rs.
1000
, rate
=
2
%
p.a.
We know
S
.
I
.
=
P
×
R
×
T
100
⇒
1000
=
P
×
2
×
2
100
⇒
P
=
1000
×
100
4
⇒
P
=
Rs.
25
,
000
Choose the corrrect relation between simple and compound interest.
Report Question
0%
C
.
I
>
S
.
I
.
0%
C
.
I
<
S
.
I
.
0%
C
.
I
=
S
I
0%
Can't say
Explanation
In simple interest, the principal amount is
P
in compound interest the principal amount is
P
+
I
(Interest of the previous year)
Since the principal amount in CI is more,
P
R
T
100
i.e., interest will be more in C.I
Hence,
C
I
>
S
I
.
Which of the following is true about Annuity Contingent ?
Report Question
0%
It is made till the happening of an event.
0%
It is made for fixed number of intervals of time.
0%
Loans for home comes under it
0%
All of the above
Explanation
⇒
True statement about Annuity contingent is
I
t
i
s
m
a
d
e
t
i
l
l
t
h
e
h
a
p
p
e
n
i
n
g
o
f
a
n
e
v
e
n
t
.
⇒
An annuity arrangement in which the beneficiary does not begin receiving payments until a specified event occurs.
⇒
A contingent annuity may be set up to begin sending payments to a beneficiary upon the death of another individual who wishes to ensure financial stability for the beneficiary, or upon retirement or disablement of the beneficiary.
Which of the following is not an example of annuity contingent ?
Report Question
0%
Daughter's Marriage Loan
0%
Life Insurance Plans
0%
Mortgage
0%
All of the above
Explanation
⇒
M
o
r
t
g
a
g
e
is not an example of annuity contingent.
⇒
Annuity contingent is an annuity arrangement in which the beneficiary does not begin receiving payments until a specified event occurs.
⇒
A contingent annuity may be set up to begin sending payments to a beneficiary upon the death of another individual who wishes to ensure financial stability for the beneficiary or upon retirement or disablement of the beneficiary.
⇒
Daughter's Marriage loan and Life insurance plans are examples of annuity contingent.
What is true about Annuity Due ?
Report Question
0%
It is an annuity in which payments are made at the end of each payment period.
0%
It is an annuity in which payments are made at the beginning of each payment period.
0%
It is an annuity in which payments are made in the middle of each payment period.
0%
None of the above
Explanation
⇒
True statement about Annuity Due is,
−
I
t
i
s
a
n
a
n
n
u
i
t
y
i
n
w
h
i
c
h
p
a
y
m
e
n
t
s
a
r
e
m
a
d
e
a
t
t
h
e
b
e
g
i
n
n
i
n
g
o
f
e
a
c
h
p
a
y
m
e
n
t
p
e
r
i
o
d
.
⇒
Annuity due is an annuity whose payment is to be made immediately at the beginning of each period.
⇒
A common example of an annuity due payment is rent, as the payment is often required upon the start of a new month as opposed to being collected after the benefit of rent has been received for an entire month.
⇒
All payments are in the same amount.
⇒
All payments are made at the same intervals of time
Determine the principal when time
=
2
years, interest
=
Rs.
1000
; rate
=
5
%
p.a.
Report Question
0%
Rs.
10000
0%
Rs.
20000
0%
Rs.
30000
0%
Rs.
40000
Explanation
Here, time
=
2
years, interest
=
Rs.
1000
, rate
=
5
%
p.a.
We know
S
.
I
=
P
×
R
×
T
100
⇒
1000
=
P
×
5
×
2
100
⇒
P
=
1000
×
100
5
×
2
=
Rs.
10
,
000
Therefore, principal is Rs.
10
,
000
.
What will you call the extra amount of money you got as profit, after investing a certain amount?
Report Question
0%
Interest
0%
Principle
0%
Amount
0%
Rate
Explanation
The extra mount of money got as profit after investing a certain amount of money is called as
I
n
t
e
r
e
s
t
.
Interest is the cost of using somebody else’s money. When you borrow money, you pay interest. When you lend money, you earn interest.
There are several different ways to calculate interest, and some methods are more beneficial for lenders. The decision to pay interest depends on what you get in return, and the decision to earn interest depends on the alternative options available for investing your money.
Identify which amount is the original amount of money, the amount before any interest is applied?
Report Question
0%
Interest
0%
Rate
0%
Principle
0%
Amount
Explanation
Principal
amount is the original amount of money, the amount before any interest is applied.
Principal is a term that has several financial meanings. The most commonly used refers to the original sum of money borrowed in a loan, or put into an investment. Similar to the former, it can also refer to the face value of a bond.
The amount borrowed, or the part of the amount borrowed which remains unpaid (excluding interest). here also called principal amount.
Jacky borrows Rs.
2000
from the bank. The Principal of the loan is _____.
Report Question
0%
Rs.
1000
0%
Rs.
2000
0%
Rs.
3000
0%
Rs.
4000
Explanation
Jacky borrows Rs.
2000
from the bank. The Principal of the loan is Rs.
2000.
Principal is a term that has several financial meanings. The most commonly used refers to the original sum of money borrowed in a loan, or put into an investment. Similar to the former, it can also refer to the face value of a bond.
The amount borrowed, or the part of the amount borrowed which remains unpaid (excluding interest). here also called principal amount.
Calculate the principal when time
=
4
years, interest
=
Rs.
4000
; rate =
10
% p.a
Report Question
0%
5
,
000
0%
10
,
000
0%
15
,
000
0%
20
,
000
Explanation
⇒
Here
I
=
R
s
.4000
,
R
=
10
%
,
T
=
4
y
e
a
r
s
⇒
P
=
I
×
100
R
×
T
⇒
P
=
4000
×
100
10
×
4
⇒
P
=
R
s
.10
,
000
In what time will Rs,
15
,
000
yield Rs.
4965
as compound interest at
10
% per year compounded annually?
Report Question
0%
3
years
0%
2
years
0%
1
years
0%
4
years
Explanation
Interest for the first year
=
1500
×
10
×
1
100
=
Rs
1500
Amount after the first year
=
Rs
15000
+
1500
=
Rs
16500
Interest for the second year
=
16500
×
10
×
1
100
=
Rs
1650
Amount after the third year
=
18150
×
10
×
1
100
=
Rs
1815
Final amount
=
Rs
18150
+
1815
=
Rs
19965
Compound interest
=
Rs
19965
−
15000
=
Rs
4965
Required time
=
3
years
A sum of Rs.
12
,
000
is invested for
3
years at
18
% per annum compound interest. Calculate the interest for the third year.
Report Question
0%
2700
0%
2800
0%
2900
0%
3000
Explanation
Interest for the first year =
12000
×
1
×
18
100
=
2160
Amount after first year =
12000
+
2160
=
14160
Interest for second year =
14160
×
1
×
18
100
=
2550
Amount after second year =
14160
+
2550
=
16708.8
Interest for third year =
16708.8
×
1
×
18
100
=
3000
(
a
p
p
r
o
x
)
Find rate, when principal = Rs.
30
,
000
; interest = Rs.
900
; time =
3
years.
Report Question
0%
1
%
0%
2
%
0%
4
%
0%
5
%
Explanation
using simple interest formula
Interest
=
Principal
×
rate
×
time
Given:
Principal
=
Rs.
30000
Rate
=
r
Time
=
3
years
Interest
=
Rs.
900
By substituting the given values in the formula,
⇒
900
=
30000
×
r
×
3
⇒
r
=
900
90000
∴
r
=
0.01
or
1
%
Calculate the principal when time
=
10
years, interest
=
Rs.
4000
; rate =
5
%
p.a.
Report Question
0%
5000
0%
6000
0%
7000
0%
8000
Explanation
Here, time
=
10
years, interest
=
Rs.
4000
, rate
=
5
%
p.a.
We know
S
.
I
.
=
P
×
R
×
T
100
⇒
4000
=
P
×
5
×
10
100
⇒
P
=
4000
×
100
50
=
Rs.
8000
⇒
Principal
=
Rs.
8000.
__________ is calculated on both the amount borrowed and any previous interest.
Report Question
0%
simple interest
0%
annual interest
0%
compound interest
0%
complex interest
Explanation
Compound interest
is calculated on both the amount borrowed and any previous interest.
Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest.
It is the result of reinvesting interest, rather than paying it out, so that interest in the next period is then earned on the principal sum plus previously accumulated interest. Compound interest is standard in finance and economics.
⇒
C
.
I
.
=
A
−
P
A sum of Rs.
12
,
000
is invested for
3
years at
18
% per annum compound interest. Calculate the interest for the second year.
Report Question
0%
2500
0%
2525
0%
2550
0%
2575
Explanation
Interest for first year =
12000
×
1
×
18
100
=
2160
Amount after first year =
12000
+
2160
=
14160
Interest for second year =
14160
×
1
×
18
100
=
2550
(
a
p
p
r
o
x
)
Which interest is computed on the sum of an original principal and accrued interest?
Report Question
0%
Simple interest
0%
Annual interest
0%
Compound interest
0%
Complex interest
Explanation
Compound interest
is computed on sum of original principal and accrued interest.
Conversely, compound interest accrues on the principal amount and the accumulated interest of previous periods; it includes interest on interest, in other words.
It is calculated by multiplying the principal amount by the annual interest rate raised to the number of compound periods, and then minus the reduction in the principal for that year.
⇒
C
.
I
.
=
P
(
1
+
R
100
)
T
−
P
A finance company declares that, with compound interest rate, a sum of money deposited by anyone will become
8
times in three years. if the same amount is deposited at the same compound-rate of interest, then in how many years it will become
128
times?
Report Question
0%
4
0%
5
0%
6
0%
7
Explanation
In three years.a sum of money deposited by anyone will become
=
2
3
=
8
times
Therefore , to make sum of money
128
times , then
2
7
=
128
, it will occcur in
7
years.
Determine the principal when time
=
4
years, interest = Rs.
1000
; rate
=
2
% p.a.
Report Question
0%
10
,
000
0%
12
,
500
0%
15
,
000
0%
20
,
000
Explanation
⇒
Here
I
=
R
s
.1000
,
R
=
2
%
,
T
=
4
y
e
a
r
s
⇒
P
=
I
×
100
R
×
T
⇒
P
=
1000
×
100
2
×
4
⇒
P
=
R
s
.12
,
500
An annuity whose payments continue till the happening of an event, the date of which cannot be foretold is called.
Report Question
0%
Contingent Annuity
0%
Deferred Annuity
0%
Perpetual Annuity
0%
Annuity certain
Explanation
An annuity whose payments continue till the happening of an event, the date of which cannot be foretold is called contingent annuity.
A sum of Rs.
25
,
000
is invested for
3
years at
20
% per annum compound interest. Calculate the interest for the third year.
Report Question
0%
6000
0%
7200
0%
8400
0%
5000
Explanation
Interest for the first year =
25000
×
1
×
20
100
=
5000
Amount after first year =
25000
+
5000
=
30000
Interest for second year =
30000
×
1
×
20
100
=
6000
Amount after second year =
30000
+
6000
=
36000
Interest for third year =
36000
×
1
×
20
100
=
7200
(
a
p
p
r
o
x
)
Find the rate of interest if the interest Rs.
1323
is earned on Rs.
4200
for
3.5
years ?
Report Question
0%
R
=
9
%
0%
R
=
10
%
0%
R
=
12
%
0%
R
=
14
%
Explanation
S
I
=
P
T
R
100
1323
=
4200
×
3.5
×
R
100
1323
=
R
×
147
∴
R
=
1323
147
=
9
%
I invested
R
s
.
500
in the bank for a year. I neither deposited nor withdrew any money from my account. At the end of the year, I checked my account and found that I have
R
s
.
600
in it. What is this extra amount called as?
Report Question
0%
Principal
0%
Profit
0%
Interest
0%
Deposit
Explanation
For every deposit made in a bank account, an interest is paid at a fixed rate which is added to the principal amount. This extra amount added to the balance is known as 'Interest'.
The period of time for which the interest is calculated is called the.
Report Question
0%
Market period
0%
Cooling period
0%
Conversion period
0%
None of the above
Explanation
The period of time for which the interest is calculated is called conversion period.
The compound interest on
R
s
.
64
,
000
for
3
years, compounded annually at
7.5
% per annum is
Report Question
0%
R
s
.
14
,
400
0%
R
s
.
15
,
705
0%
R
s
.
15
,
507
0%
R
s
.
15
,
075
Explanation
P
r
i
n
c
i
p
a
l
=
64000
R
a
t
e
=
7.5
%
p
.
a
T
i
m
e
=
3
y
e
a
r
s
Where r is the rate and t is the time.
C
I
=
64000
(
1
+
7.5
/
100
)
3
−
64000
=
64000
(
1
+
75
/
1000
)
3
−
64000
=
64000
(
1
+
3
/
40
)
3
−
64000
=
64000
×
(
43
/
40
)
3
−
64000
=
64000
×
(
43
/
40
×
43
/
40
×
43
/
40
)
−
64000
=
(
43
×
43
×
43
)
−
64000
=
79507
−
64000
=
15507
Hence CI will be 15507 rupees
If the periodic payments are all equal, the annuity is called level of.
Report Question
0%
Deferred Annuity
0%
Uniform Annuity
0%
Forborne Annuity
0%
Immediate Annuity
Explanation
If the periodic payments are all equal, the annuity is called level of uniform annuity.
If
P
=
5
,
000
,
T
=
1
,
S
.
I
.
=
Rs.
300
, R will be.
Report Question
0%
5
%
0%
4
%
0%
6
%
0%
None of the above
Explanation
Given
I
=
R
s
300
P
=
R
s
5000
T
=
1
Apply the formula for simple interest
I
=
P
×
R
×
T
100
300
=
5000
×
1
×
R
100
R
=
300
50
=
6
%
Hence option (C) is correct option
An annuity left unpaid for a certain number of years is called ________ for that number of years.
Report Question
0%
Deferred Annuity
0%
Uniform Annuity
0%
Forborne Annuity
0%
Immediate Annuity
Explanation
An annuity left unpaid for a certain number of years is called forborne annuity for that number of years.
If the simple interest on
1700
rupees is
340
rupees for
2
years then the rate of interest must be:
Report Question
0%
12
%
0%
15
%
0%
4
%
0%
10
%
Explanation
Principle
=
R
s
1700
T
i
m
e
=
2
y
e
a
r
s
S
I
=
R
s
340
R
a
t
e
=
?
P
×
R
×
T
100
=
340
1700
×
R
×
2
100
=
340
R
=
340
×
100
1700
×
2
=
340
×
5
170
=
10
%
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