IC28 Mock Test Sample 2

Q1. For an annuity certain due of Rs. 1 p.a. payable for 10 years, the first payment is made at:
a) End of 1st year
b) Beginning of 1st year
c) End of 10th year
d) Time 5

Q2. If no payment is made during the first time period and the first payment is made after a deferment period, the annuity is called:
a) Annuity due
b) Deferred annuity
c) Perpetuity
d) Level annuity

Q3. For an annuity certain of Rs. 1 p.a. in arrears for 10 years with a deferment period of 5 years, the first payment is made at:
a) End of 5th year
b) End of 6th year
c) End of 10th year
d) End of 15th year

Q4. The present value of an annuity is:
a) Sum of accumulated values of payments
b) Sum of present values of each periodical payment
c) Future value at expiry
d) Sum of future payments

Q5. The standard symbol ān| denotes:
a) Accumulated value of an immediate annuity
b) Present value of an immediate annuity certain in arrears
c) Present value of an annuity due
d) Perpetuity due

Q6. The formula for the present value of an immediate annuity certain in arrears is:
a) ān| = (1 − vn)/i
b) ān| = ((1 + i)n − 1)/i
c) ān| = (1 − vn)/d
d) ān| = (1 + i)n

Q7. If i = 0, then ān| equals:
a) 0
b) 1
c) n
d) vn

Q8. The expression ān| = v + v² + v³ + … + vn is a geometric progression with common ratio:
a) 1 + i
b) v
c) i
d) vn

Q9. The symbol ä n| denotes the present value of:
a) Immediate annuity in arrears
b) Annuity due payable in advance
c) Deferred annuity
d) Perpetuity

Q10. The relation between ä n| and ān| is:
a) ä n| = ān|
b) ä n| = (1 + i) ān|
c) ä n| = v ān|
d) ä n| = (1 − v) ān|

Q11. ä n| can also be expressed as:
a) 1 + ān−1|
b) 1 + ān+1|
c) ān| + 1
d) ān| − 1

Q12. The accumulated value at the end of n years of an immediate annuity of 1 p.a. payable for n years at rate i is denoted by:
a) ān|
b) sn|
c) s̈n|
d) vn

Q13. The formula for the accumulated value sn| of an immediate annuity is:
a) (1 − vn)/i
b) ((1 + i)n − 1)/i
c) (1 − vn)/d
d) (1 + i) ān|

Q14. The relation sn| = (1 + i)n ān| is given by which equation?
a) (2.6)
b) (2.7)
c) (2.8)
d) (2.13)

Q15. Conversely, ān| can be written as:
a) vn sn|
b) (1 + i)n sn|
c) v sn|
d) sn|/n

Q16. Evaluating (1 + i)5 ā8| at 7% by the short method gives:
a) s5| + a3|
b) s8| + a5|
c) a5| + s3|
d) v5 s8|

Q17. For Example 5, the value at the end of 5½ years of Rs. 120 p.a. payable half-yearly for 10 years at 6% p.a. convertible half-yearly is approximately:
a) Rs. 1235.63
b) Rs. 1500.00
c) Rs. 1100.00
d) Rs. 1000.00

Q18. v4 s12| at 8% equals:
a) s4| + a8|
b) s8| + a4|
c) a12|
d) v12 s4|

Q19. v9 s14| at 9% by the short method equals:
a) s9| + a5|
b) s5| + a9|
c) a14|
d) v5 s14|

Q20. (1 + i)6 a10| at 9% by the short method equals:
a) s6| + a4|
b) s4| + a6|
c) a10|
d) s10| + a6|