Financial Management - Study Mode

[#396] Which of the following is not normally one of the reasons for a change in an investor's circumstances?
Correct Answer

(B) Change in legal considerations

Explanation

Solution: Change in legal considerations is not normally one of the reasons for a change in an investor's circumstances.

[#397] If deposited money Rs 10,000 in bank pays interest 10% annually, an amount after five years will be
Correct Answer

(A) Rs 16,105.14

Explanation

Solution: FV = PV ( 1 + r/100 )ⁿ = 10000 ( 1 + 10/100)⁵ = Rs 16,105.14

[#398] Student loans, mortgages and car loans are examples of
Correct Answer

(B) deferred annuity

Explanation

Solution: Student loans, mortgages and car loans are examples of deferred annuity. A deferred payment annuity is an insurance product that provides future payments to the buyer rather than an immediate stream of income.

[#399] An annuity with an extended life is classified as
Correct Answer

(B) perpetuity

Explanation

Solution: An annuity with an extended life is classified as perpetuity. A perpetuity is an annuity that has no end, or a stream of cash payments that continues forever. There are few actual perpetuities in existence.

[#400] Periodic rate if it is multiplied with per year number of compounding periods is called
Correct Answer

(D) nominal annual rate

Explanation

Solution: Periodic rate if it is multiplied with per year number of compounding periods is called nominal annual rate. The nominal interest rate is the interest rate before taking inflation into account, in contrast to real interest rates and effective interest rates.