SEBI - Investor Certification Examination
SEBI-Investor-Certification-Examination
Q 46. How does inflation affect the price of goods over time?
Decreases the price of goods
Does not affect the price
Increases the price of goods
Randomly changes the price
Q 47. What is one way to mitigate the adverse effects of inflation on investments?
Avoid investing altogether
Invest at a rate equal to or higher than the rate of inflation
Keep money in a savings account
Only invest in low-risk assets
Q 48. What is the "real rate of return"?
Return before factoring in inflation
Return after factoring in inflation
Guaranteed fixed return
Return excluding taxes
Q 49. What is the power of compounding?
Earning interest only on the principal
Earning interest on the principal and previously earned interest
Earning no interest at all
Only applicable to short-term investments
Q 50. How does simple interest differ from compound interest?
Simple interest includes interest on both principal and previous interest
Compound interest includes interest only on the principal
Simple interest includes interest only on the principal
Compound interest is fixed and simple interest is variable
Q 51. What is the Rule of 72?
A method to calculate interest rates
A method to determine how long it takes to double your money at a given interest rate
A method to halve your money in a certain period
A principle for saving money
Q 52. Using the Rule of 72, how long will it take to double your money at a 6% annual interest rate?
6 years
8 years
10 years
15 years
Q 53. What is the primary factor that inflation affects in investment decisions?
Liquidity
Risk tolerance
Purchasing power
Investment duration
Q 54. What should investors focus on to combat inflation?
Low-risk investments
High liquidity investments
RThe realrate of return
Fixed interest investments
Q 55. What is the effect of compound interest on investments over time?
It decreases the value of investments
It has no effect
It significantly increases the value of investments
It guarantees fixed returns
Q 56. Which of the following is an example of the power of compounding?
Investing ₹1,000 at 5% interest annually and earning interest only on the principal
Investing ₹1,000 at 5% interest annually and reinvesting the interest earned
Keeping ₹1,000 in a non-interest-bearing account
Borrowing ₹1,000 at a high interest rate
Q 57. What is the main benefit of using the Rule of 72 in financial planning?
It provides exact investment outcomes.
It simplifies the estimation of how long it will take to double an investment.t
It guarantees a specific return
It reduces the impact of inflation
Q 58. Why should you consider the rate of inflation when making investment decisions?
To ensure zero risk
To maximize tax benefits
To maintain or increase the purchasing power of your money
To guarantee fixed returns
Q 59. How does inflation affect the value of a five-hundred-rupee note over time?
It increases the value
It keeps the value the same
It decreases the value
It doubles the value
Q 60. What is rupee cost averaging?
Investing a fixed amount at irregular intervals
Investing a fixed amount at regular intervals regardless of market conditions
Investing varying amounts based on market predictions
Investing only when the market is low