IC28 Mock Test Sample 13

Q1. In Example 4, the fund balance at end of 8 years (after 8th payment) of Example 4 is approximately:

a) Rs. 500
b) Rs. 698.85
c) Rs. 800
d) Rs. 488.88

Q2. What is the 'remunerative rate' in lender's sinking fund?

a) The rate at which the sinking fund accumulates
b) The rate of interest on the loan
c) The risk-free rate
d) The market average rate

Q3. What is the 'reproductive rate' in lender's sinking fund context?

a) The rate of interest on loan
b) The rate at which sinking fund accumulates
c) The replacement rate
d) The discount rate

Q4. If loan rate is $i'$ and sinking fund rate is $i$ (with $i' > i$), the lender's annual receipt per unit loan is (formula 4.9):

a) $i + 1/s_{\overline{n}|}$
b) $i' + 1/s_{\overline{n}|}$
c) $i + 1/a_{\overline{n}|}$
d) $i' \cdot a_{\overline{n}|}$

Q5. Per relation (4.10), the annuity factor at two rates $a_n^{i' \& i}$ can be expressed as:

a) $(a^i_{\overline{n}|})/(1+(i'-i)a^i_{\overline{n}|})$
b) $1/(i'+i)$
c) $a^{i'}_{\overline{n}|}$
d) $1/(1-v^n)$

Q6. Per relation (4.11), the formula $1/a_n^{i' \& i} - i'$ equals:

a) $1/s_{\overline{n}|}$
b) $1/a_{\overline{n}|}$
c) $i$
d) $v^n$

Q7. Per (4.13), the interest contained in the t-th instalment of unit loan repaid by $1/a_n^{i' \& i}$ over n years is:

a) $(1)/(a^i_{\overline{n}|})(1-v^{n-t+1})+(i'-i)$
b) $1-v^t$
c) $i' \cdot v^t$
d) $v^{n-t}$

Q8. Per relation (4.14), the interest contained in t-th instalment can also be written as:

a) $i' - i \cdot s_{\overline{t-1}|}/s_{\overline{n}|}$
b) $i + 1/s_n$
c) $1-v^n$
d) $i' \cdot a_n$

Q9. In Example 7, a loan of Rs. 8000 over 15 years to give effective 12% on capital with sinking fund at 10%. Yearly instalment is approximately:

a) Rs. 1000
b) Rs. 1211.79
c) Rs. 1500
d) Rs. 800

Q10. In Example 7, capital contained in 5th instalment is approximately:

a) Rs. 386.64
b) Rs. 500
c) Rs. 250
d) Rs. 600

Q11. In Example 8, X purchases from Y a 20-year annuity certain of Rs. 1000 p.a. yielding 10% with sinking fund at 9%. Price P is approximately:

a) Rs. 7000
b) Rs. 8000
c) Rs. 8365
d) Rs. 9000

Q12. In Example 8(c), if both X and Y desire to end the transaction immediately after 14th instalment, the equitable price is approximately:

a) Rs. 4111
b) Rs. 4293
c) Rs. 4486
d) Rs. 5000

Q13. What is the 'Capital Redemption Policy'?

a) A loan against an insurance policy
b) An insurance policy where premiums accumulate to provide a fixed sum at end of term
c) A type of mortgage
d) A government bond

Q14. Per formula (4.19), the annual premium $P_{\overline{n}|}$ for a unit Capital Redemption Policy at rate i is:

a) $1/s̈_{\overline{n}|}$
b) $1/s_{\overline{n}|}$
c) $i \cdot a_n$
d) $1/a_n$

Q15. Per (4.20), the single premium for unit assurance at end of n years is:

a) $v^n$
b) $1+i$
c) $1/(1+i)$
d) $1/s_n$

Q16. Per (4.21), $P_{\overline{n}|}$ also equals:

a) $1/ä_{\overline{n}|} - d$
b) $i + 1/s_n$
c) $v^n$
d) $1/a_n$

Q17. Per (4.22), the policy value $_tV_{\overline{n}|}$ by retrospective method equals:

a) $s_{\overline{t}|}/s_{\overline{n}|}$
b) $a_t/a_n$
c) $v^t$
d) $1-v^t$

Q18. Per (4.23), the policy value by prospective method equals:

a) $1-(P_n+d)ä_{\overline{n-t}|}$
b) $P_n+i$
c) $v^{n-t}$
d) $s_{\overline{n-t}|}/s_n$

Q19. What is the 'Paid-up Value' of a capital redemption policy?

a) The total premiums paid
b) The reduced sum assured if future premiums are discontinued
c) The surrender value
d) The full sum assured

Q20. Per (4.24), the theoretical paid-up value $_tW_{\overline{n}|}$ equals:

a) $a_{\overline{t}|}/a_{\overline{n}|}$
b) $v^t$
c) $s_t/s_n$
d) $P_n \cdot t$