IC28 Mock Test Sample 8

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Q1. The present value of an increasing annuity-due $(I\ddot{a})_{\overline{n}|}$ is:

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

Q2. An alternative expression (equation 3.4) for $(I\ddot{a})_{\overline{n}|}$ is:

a) $\ddot{a}_{\overline{n}|} + (a_{\overline{n}|} - nv^{n-1})/(i)$
b) $a_{\overline{n}|} + (a_{\overline{n}|} - nv^n)/(i)$
c) $\ddot{a}_{\overline{n}|} \cdot n$
d) $1/d^2$

Q3. By general reasoning, the relation between $(I\ddot{a})_{\overline{n}|}$ and $(Ia)_{\overline{n}|}$ is:

a) $(I\ddot{a})_{\overline{n}|} = (1+i)(Ia)_{\overline{n}|}$
b) $(I\ddot{a})_{\overline{n}|} = v(Ia)_{\overline{n}|}$
c) $(I\ddot{a})_{\overline{n}|} = (Ia)_{\overline{n}|}$
d) $(I\ddot{a})_{\overline{n}|} = i(Ia)_{\overline{n}|}$

Q4. The present value of an increasing perpetuity due $(I\ddot{a})_{\overline{\infty}|}$ equals:

a) $1/i$
b) $1/d$
c) $1/d^2$
d) $1/i^2$

Q5. For an annuity in arithmetic progression with first payment $A$ and common difference $D$, the $k^{th}$ payment is:

a) $A \cdot k$
b) $A + (k-1)D$
c) $A + kD$
d) $Ak^2$

Q6. The present value of an immediate annuity in arithmetic progression is:

a) $A a_{\overline{n}|} + D((a_{\overline{n}|}-nv^n)/(i))$
b) $A a_{\overline{n}|}$
c) $D(Ia)_{\overline{n}|}$
d) $An + Dv^n$

Q7. In Example 2, the present value of payments 4, 7, 10, ... at 7% has parameters:

a) $A=4, D=3, n=10$
b) $A=4, D=4, n=10$
c) $A=7, D=3, n=10$
d) $A=4, D=3, n=7$

Q8. In Example 2, the present value at 7% for 10 years of payments 4, 7, 10, ... is approximately:

a) Rs. 111.24
b) Rs. 40.00
c) Rs. 7.00
d) Rs. 200.00

Q9. In Example 3, the deferred perpetuity portion of Rs. 5000 p.a. at 5% has present value:

a) Rs. 64,460
b) Rs. 5,000
c) Rs. 1,00,000
d) Rs. 84,631.80

Q10. In Example 3, the total fund required to meet outgo at 5% is approximately:

a) Rs. 84,631.80
b) Rs. 20,171.80
c) Rs. 64,460
d) Rs. 1,00,000

Q11. For an annuity in geometric progression with first payment $A$ and common ratio $R$, the $k^{th}$ payment is:

a) $AR^k$
b) $AR^{k-1}$
c) $A + kR$
d) $Ak \cdot R$

Q12. The present value of an immediate annuity in geometric progression is:

a) $A(1-R^n v^n)/((1+i)-R)$
b) $A(1-v^n)/(i)$
c) $AR^n$
d) $A/(1-R)$

Q13. The accumulated value of an immediate increasing annuity is denoted by:

a) $(Is)_{\overline{n}|}$
b) $(Ia)_{\overline{n}|}$
c) $\ddot{s}_{\overline{n}|}$
d) $(Ds)_{\overline{n}|}$

Q14. $(Is)_{\overline{n}|}$ in terms of $(Ia)_{\overline{n}|}$ is:

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

Q15. $(Is)_{\overline{n}|}$ simplifies to:

a) $s_{\overline{n}|} + (s_{\overline{n}|}-n)/(i)$
b) $\ddot{s}_{\overline{n}|} + n$
c) $s_{\overline{n}|} + n$
d) $1/i^2$

Q16. The accumulated value of an increasing annuity due $(I\ddot{s})_{\overline{n}|}$ equals:

a) $\ddot{s}_{\overline{n}|} + (\ddot{s}_{\overline{n}|} - n(1+i))/(i)$
b) $s_{\overline{n}|} + n$
c) $(1+i)^n a_{\overline{n}|}$
d) $1/d^2$

Q17. For an annuity payable $r^{th}$ly for $n$ years, the present value is denoted by:

a) $a_{\overline{n}|}^{(r)}$
b) $a_{\overline{n}|}$
c) $\ddot{a}_{\overline{n}|}$
d) $(Ia)_{\overline{n}|}$

Q18. The relation between $a_{\overline{n}|}^{(r)}$ and $a_{\overline{n}|}$ involves:

a) $a_{\overline{n}|}^{(r)} = \frac{i}{i^{(r)}} a_{\overline{n}|}$
b) $a_{\overline{n}|}^{(r)} = r a_{\overline{n}|}$
c) $a_{\overline{n}|}^{(r)} = a_{\overline{n}|}/r$
d) $a_{\overline{n}|}^{(r)} = a_{\overline{n}|} + r$

Q19. In Example 7, the effective rate per period is:

a) 6%
b) 2%
c) 4%
d) 12%

Q20. In Example 7, the equivalent annuity is:

a) Rs. 100 per period for 60 periods
b) Rs. 300 per year for 20 years
c) Rs. 25 per month
d) Rs. 3,600 p.a.

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