JAIIB Exam 2025 – AFM Important Questions MCQs Quiz-21

08/04/2025

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JAIIB Exam 2025 AFM Important Questions MCQs Quiz-21

JAIIB Exam Quiz 2025: The JAIIB exam is scheduled for 2025 by IIBF. Here, we are providing JAIIB AFM MCQ-based quizzes on a regular basis. You can attempt the quizzes regularly to prepare for the upcoming JAIIB exam. The quizzes will be provided module-wise and unit-wise. You can attempt the JAIIB AFM quizzes from the links below and improve your preparation by practicing regularly. These quizzes will help you boost your score in the JAIIB exam and guide you to clear the exam on your first attempt.

Q.1 A sum of ₹5,000 is invested at a simple interest rate of 6% per annum for 3 years. What will be the total interest earned?
A) ₹800
B) ₹900
C) ₹1,000
D) ₹1,200

Q.2 What will be the compound interest on ₹4,000 for 2 years at 5% per annum, compounded annually?
A) ₹400
B) ₹410
C) ₹420
D) ₹430

Q 3 Priya deposits ₹60,000 in a bank at a simple interest rate of 4.5% per annum for 120 days. How much total amount will she have after 120 days?
A) ₹60888
B) ₹61,888
C) ₹60,900
D) ₹60,740

Q.4 A borrower takes a home loan of ₹30 lakhs at a floating interest rate of 11.5% per annum in January 2023, linked to the bank’s base rate. In January 2024, the bank revises its base rate upward by 0.75%. Assuming the borrower opts for the equated monthly installment (EMI) system without changing the EMI amount, what is the most likely outcome of this change?
A) The loan amount will increase due to higher interest.
B) The tenure of the loan will increase, but the EMI will remain the same.
C) The EMI will increase, and the tenure will remain constant.
D) The total interest payable will remain the same due to RBI protection rules.

Q.5 Which of the following best explains why the effective interest rate is higher in a front-end interest rate system compared to a back-end interest rate system, even when the nominal rate remains the same?
A) Because the interest is calculated using a higher benchmark rate.
B) Because the repayment tenure is longer under front-end interest systems
C) Because the interest is charged only on outstanding daily balances in back-end systems.
D) Because the borrower receives a lesser disbursed amount, while the interest is calculated on the full principal.

Q.6 Which of the following statements most accurately differentiates an Ordinary Annuity from an Annuity Due?
A. In an Ordinary Annuity, payments are made at the beginning of each period, whereas in an Annuity Due, they are made at the end.
B. An Annuity Due typically yields less interest than an Ordinary Annuity, assuming equal payment amounts and interest rates.
C. Ordinary Annuities involve payments at the end of each period, such as semiannual bond coupons, while Annuities Due require
payments at the beginning of each period, such as monthly rent.
D. There is no financial difference between an Ordinary Annuity and an Annuity Due if the total number of payments is the same.

Q.7 A borrower takes a loan of ₹5,00,000 at an annual interest rate of 12% compounded monthly, to be repaid over 5 years in equal monthly installments (EMIs). What is the approximate EMI?
A. ₹11,110
B. ₹12,000
C. ₹13,367
D. ₹14,210

Q.8 Why is an amortisation schedule important when a loan is repaid through EMIs?
A. It helps in calculating the future value of the loan after full repayment.
B. It shows the breakdown of each EMI into interest and principal components over time, which is useful for financial planning and tax purposes.
C. It ensures that all EMIs remain variable, adjusting to market interest rates.
D. It helps banks decide the eligibility of a borrower for future loans.

Q.9 A loan of ₹22,000 is to be repaid through quarterly payments of ₹5,000 each, with interest at 10% p.a., compounded quarterly. How much of the first payment will go toward interest, and how much toward principal repayment?
A. ₹550 interest, ₹4,450 principal repayment
B. ₹500 interest, ₹4,500 principal repayment
C. ₹600 interest, ₹4,400 principal repayment
D. ₹525 interest, ₹4,475 principal repayment

Q.10 Which of the following best explains the financial rationale behind using a sinking fund in conjunction with a bullet/balloon repayment loan structure?
A. To minimize the total interest payable on the loan by repaying both principal and interest in small periodic amounts.
B. To ensure the borrower gradually repays the loan principal through equal EMI payments, reducing default risk.
C. To accumulate sufficient funds through periodic deposits, which earn interest, so the borrower can repay the full principal in a lump sum at maturity without creating a sudden cash flow burden.
D. To allow the lender to receive a portion of the principal and full interest in every period, while the borrower pays only interest until maturity.

Q.11 A company takes a loan of ₹10,00,000, repayable as a balloon payment at the end of 5 years, and plans to create a sinking fund to accumulate this amount. The fund earns 8% annual interest compounded annually. What annual sinking fund deposit must the company make to accumulate the required ₹10,00,000?
A. ₹1,84,250
B. ₹1,80,000
C. ₹1,70,451
D. ₹1,65,410