Retirement Planning
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Retirement Planning Choose the CORRECT option (A-E) listed below, more than one answer may be correct. QUESTION 1 - Which of the following is a defined contribution plan? A) Leave salary B) Gratuity C) Recognized provident fund D) VRS E) Retrenchment compensation QUESTION 2 - Tarun is the nominee in the existing Post Office NSC investments of Ragini. Tarun wants to know in case these NSCs are pledged to a bank for availing a loan, what impact will it have on his nomination in these NSCs. A) His nomination shall stand as it is. B) I am not attempting C) Decision on carry forward of existing nomination upon pledge of NSCs is a privileged right of the Post Master of the Post Office concerned. D) No pledge is permitted for NSC. E) His nomination shall stand cancelled as soon as any pledge is made. QUESTION 3 - Which of the following is true for PPF 1. It enjoys tax benefit u/s 80C 2. Any number of deposits can be made in a financial year 3. Interest is payable @ 8% 4. Interest is compounded half yearly A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 4 - OASIS means in this context: A) A project for the welfare of the child B) The project called Old Age for Social and Income Security C) A project for the welfare of the female child D) A water fall. E) A green patch with water resources in the midst of the desert. QUESTION 5 - Which of the following statement/s are true?
1. An intentional tort involves an action that is carried out voluntarily and with foreknowledge of the wrongful or harmful consequences. 2. An immediate annuity is always purchased with single premium 3. Res ipsa loquitor means that the very fact that the injury or damages occurs establishes a presumption of negligence on behalf of the defendant 4. Imputed negligence are conditions under which negligence committed by one person cannot be attributed to another person
A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 6 - Vishal is working with Amex Ltd since October 1, 1993. He is entitled to a basic salary of Rs. 6,000 per month. Dearness Allowance is 40% of Basic Salary for retirement benefits. He retired from his job on January 1, 2007. He is entitled to the following benefits at the time of retirement. Gratuity = Rs. 98,000. Pension from January 1, 2007 = Rs. 2,000 per month. Payment from recognized PF = Rs. 3,00,000. Encashment of earned leave for 150 days = Rs. 36,000. He was entitled to 40 days leave for every completed year of service. He got 50% of his pension commuted in lump sum w.e.f April 1, 2007 and received Rs. 1,20,000 as commuted pension. Vishal contributes Rs. 900 per month to RPF A) Rs 2000 B) NIL C) Rs 6000 D) Rs 4000 E) Rs 1000 QUESTION 7 - Interest is fully exempt from tax in case of 1. Statutory provident fund 2. Unrecognized provident fund 3. Public provident fund 4. Recognized provident fund A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct
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E) All correct QUESTION 8 - Which of the following statements are true for bonds? 1. When price goes up, yield goes down, and vice versa. 2. Yield is the rate of return you get on a bond. 3. Stocks are equity; bonds are debt. 4. Bonds are not risk free. A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 9 - Ms. Rekha is 45 years old and plans to retire at 50. Her life expectancy is 70 years. Ms. Sushma, her Financial Planner, estimates that her client will require Rs.45,000/- in the first month after retirement. Inflation rate is 4% p.a. and the rate of return is 6% p.a. What will be the savings per year required in order to meet this? A) 1591967 B) 1690000 C) 1480000 D) 1580629 E) 1588730 QUESTION 10 - Raj joins ABC Ltd. on 25th April 1967. ABC has 30 employees. If he is expected to retire on 15th November 2007, and his last drawn salary for gratuity purposes is Rs. 26,000 per month, what would be ABC Ltd's liability on account of Raj's gratuity entitlement if ABC Ltd is covered under the payment of Gratuity Act, 1972? A) 520000 B) 312000 C) 350000 D) 615000 E) 600000 QUESTION 11 - Laxman is an NRI who has been working in the US for the past 5 years. He is aged 40 and has a family of wife and 2 children, aged 14 and 12 to support. He has been saving Rs. 8 lakh per annum for the past 5 years and hopes to save the same amount for the next 10 years that he plans to live in the US. He would like to return to India 10 years from now. The inflation-adjusted monthly income requirement for Laxman, as estimated by the planner, is Rs. 80000 in the year
in which he returns to India. It is estimated that inflation would remain at an average of 3% for the next 30 years. His life expectancy is placed at 70 years. However if the estimated spend per month, for his family is Rs. 90,000 p.m., and the rate of inflation is 4%p.a, how long will the corpus last. A) The funds will last until Laxman is 72 years old. If his life span is only 70 years, he will leave behind an estate of Rs. 10904325. B) The funds will not be adequate to fund his estimated life span of 70 years. He will leave no estate behind for the children. C) The funds will last until Laxman is 81 years old. He will not be able to leave behind any estate for his children. D) I am not attempting E) The funds will exhaust before Laxman is 71 years old. If his life span is only 70 years, he will leave behind an estate of Rs. 987835. QUESTION 12 - A PPF account was opened on 10th July 1990. It will mature on ________. A) 1-4-2006 B) 10-7-2005 C) 9-7-2005 D) 11-7-2005 E) 1-4-2007 QUESTION 13 - In superannuation fund case of an approved
1. Contribution paid by the employee is eligible for tax rebate. 2. Death benefit payable under the fund is exempt from Income Tax. 3. Contribution paid by the Employer is not included in the value of taxable perquisites in the hands of the employee. 4. Commuted Value payable on Retirement at or after a specified age is exempt from income tax. A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 14 - Mr. Ramesh retired from PTC Ltd after completing service of 29 years and 9 months. His salary at the time of retirement was Rs. 10500 per month while the average salary drawn for the preceding 10 months worked out to Rs. 9800 per month. The actual amount of gratuity received by
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him at the time of retirement was Rs. 3.25 lakh. Calculate the amount of gratuity exempt from tax assuming that he is covered by the provisions of Payment of Gratuity Act, 1972? A) Rs. 294000 B) None of the above C) Rs 315000 D) Rs 181730 E) Rs 394000 QUESTION 15 - Mark True & false A) Maturity value of Rs 50000 invested for 5 years @ 8% will be Rs 73466 B) Maturity value of Rs 25000 invested for 3 years @ 6% will be Rs 29775 C) FV of Rs 100 after 5 years @8%pa compounded quarterly will be les than if invested at 8% compounded half yearly D) Saurabh will get Rs 6083 by investing Rs 5000 today for 5 years @5%pa E) Maturity value of Rs 10000 invested for 5 years @ 8% will be 14567 QUESTION 16 - A client has the need to provide for his child's college education costs. He envisages that four annual payments of Rs 20,000/, in current money terms, would be needed beginning 15 years from now. Assuming level of inflation rate at 5% per annum and that the fund earns 8% per annum returns throughout; calculate the present value to be placed on this liability when carrying out a needs analysis for this client. (Round of your answer to the nearest '000') A) 23000 B) 50000 C) 24000 D) 34000 E) 49000 QUESTION 17 - Which of the following is a government security? 1. Dated security 2. Capital indexed bond 3. T Bill 4. 8% Savings bond A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct
QUESTION 18 - Post office recurring deposit account A) allows loan facility B) pays interest @ 8% pa. C) can be opened by an NRI D) enjoys tax benefit u/s 80C E) interest is tax-free QUESTION 19 - In case of Employees Pension Scheme 1995 1. When pension is taken between 50-58 years of age, the amount of pension is reduced by 3% for each year if taken in advance before of 58 years of age. 2. When pension is taken between 50-58 years of age, the amount of pension is reduced by 2% for each year if taken in advance before of 58 years of age. 3. Full pension is calculated amount as per formula if the Pension is taken at 58 years of age 4. On rendering 20 years of Pensionable service or more, member's Pensionable service shall in all cases be reduced by 2 years A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 20 -Post office savings account 1. can be opened with a minimum of Rs 20 2. can have a maximum deposit balance of Rs 1 lac for single holder 3. earns interest @ 3.5% pa 4. can be opened by an individual, HUF & Minor A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 21 - True & False 1. If interest is charged @ 1.5% per month on the outstanding balance of a MasterCard bill, then effective annual rate is equal to 19.56% 2. Rs 4727 will become Rs 7500 in 7 years @ 6% 3. Ram would prefer to earn 20% compounded daily on a money-market account than 21%
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compounded annually for a one-year period. 4. Rs 4987 will become Rs 7500 in 8 years @ 7% A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 22 - Avinash pays his mortgage of Rs. 12 Lakh for 15 years at an interest rate of 7%. Avinash makes the payments on a monthly basis. What is the total amount of interest Avinash will pay over the term of the mortgage? (Select closest answer) A) Rs 647000 B) Rs 741470 C) Rs 776300 D) Rs 730210 E) Rs 697000 QUESTION 23 - Which are true for senior citizen savings scheme A) Premature closure of account is not allowed B) Individual can open only one account C) Enjoys tax benefit u/s 80C D) HUF can open an account under the scheme E) Cannot be extended on maturity QUESTION 24 - (A) If the assignee dies after the death of life assured and before settlement, the policy money would be payable to the heirs of the assignee. (B) If the assignee dies after the death of life assured and before settlement, the policy money would be payable to the heirs of the life assured. A) Both are correct B) I am not attempting C) A is correct D) Both are incorrect E) B is correct QUESTION 25 - Mr. Nirav an affluent broker wants to retire at 45. He wants to maintain his present living standard. He spends Rs.3,25,000/- a year. He is expected to live upto 85. Inflation is to be assumed at 4% and expected returns are 7% p.a. How can he achieve this? He is at present 30 years old. What is the nest egg required at age 45 and what amount should he save every year to meet his plan? His present investments are Rs.10,00,000/-. (Assumption: All computations for interest, spend
and savings compound annually, beginning of the period investment).
assuming
A) Nest egg and savings required will be Rs.1,47,73,065/- and Rs.7,40,530/- respectively. B) Nest egg and savings required will be Rs.1,41,82,819/- and Rs.4,24,865/- respectively C) Nest egg and savings required will be Rs.2, 51,00,065/- and Rs.5, 41,093/- respectively. D) Nest egg and savings required will be Rs.1, 27,73,065/- and Rs.4,38,300/- respectively E) I am not attempting QUESTION 26 - You and your spouse have found your dream home. The selling price is Rs 220,000; you will put Rs 50,000 down and obtain a 30-year fixed-rate mortgage at 7.5% APR for the balance. Assume that monthly payment begins today. What will each payment be? A) 1188 B) 1181 C) 1359 D) 1529 E) 1538 QUESTION 27 - Abhishek has to pay college admission fee of Rs. 80000 for his son for 3 years hence, How much should be save at the end of each month to have this amount after 3 yrs. Assume interest rate of 8% pa A) 1974 B) 1961 C) 1982 D) None E) 1950 QUESTION 28 - Ahmed' current annual expenditure is Rs. 100000/-. He is 30 years old and expects to retire at age 55. His annual expenses are estimated to rise by 6% p.a. and his life expectancy is 75 years. His post retirement annual expenses are estimated to be 80% of his preretirement expenses. What will be his expenses on the first year of his retirement? A) 402350 B) 343350 C) 429187 D) 347425 E) 422560 QUESTION 29 - The cash purchase price of an item is Rs. 2,00,000. The selling company however
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offers installment plan, which allows an immediate payment of Rs. 10,000 and a series of 5 half-yearly payments thereafter. The first installment is payable after one and a half year. If the company wants rate of interest of 10% P.A. compounded half-yearly, what will be the half-yearly installment? A) Rs 50802 B) Rs 45678 C) Rs 29412 D) Rs 48383 E) Rs 43885 QUESTION 30 - In case of Employees' Provident Funds & Miscellaneous Provisions Act, 1952 1. The employer contribute 12% or 10% matching the contribution made by employee 2. If the employee wages are more than 6501, then employer can limit his contribution to 10% or 12% of Rs 6500 3. The employee contribute 12 % of the basic wages, 4. If the employee wages are more than 6501, then employer can limit his contribution to 10% A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 31 - Which of the following statement/s are correct? 1. Equity-Indexed Annuity is a type of deferred annuity that credits interest based upon growth of an equity index. 2. Annuity Certain is the contract that offers the annuitant or the beneficiary (if the annuitant dies) an income for a specified number of years, regardless of the policyholder's life or death. 3. The time between the purchase and pay out period of a deferred annuity is called accumulation phase. 4. The process of converting an annuity from a single sum to take a guaranteed monthly or annual income from the annuity is called annuitization. A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct
QUESTION 32 - Mr. Gaurav is working with APE Ltd. since October 1, 1992. He is entitled for the basic salary of Rs.6000 per month and Dearness Allowance is 40% of Basic Salary for retirement benefits. He retired from his job on January 1, 2006 (3 months before the end of F.Y 2006) and shifted to his village. He is entitled to the following benefits at the time of retirement. Gratuity = Rs. 98000. Pension from January 1, 2005 = Rs. 2000 per month. Payment from recognized PF = Rs. 300000. Encashment of earned leave for 150 days = Rs. 36000. He was entitled to 40 days leave for every completed year of service. He got 50% of his pension commuted in lump sum w.e.f March 1, 2006 and received Rs. 120000. What amount will he get as the tax exemption under the Payment of Gratuity Act, 1972?
A) I am not attempting B) 10 month's average salary C) None of the above D) NIL E) Actual Encashed salary QUESTION 33 - PO time deposit scheme A) enjoys tax benefit u/s 80C B) pays annual interest, which is compounded quarterly C) doesn't allow premature withdrawal D) interest is tax-free E) can be opened for 1,2,3,4 & 5 years QUESTION 34 - Sajid has a pension policy details of which are given as under; Pension policy; 28 year PPT; Non Participating policy; Yearly premium Rs. 10,000; guaranteed returns of Rs. 50/1,000 SA; SA during accumulation phase Rs. 3 Lakh; No riders. What will be the value of the accumulated corpus just on completion of the premium paying term? A) Rs 8.00 lacs B) Rs 4.80 lacs C) Rs 5.60 lacs D) Rs 7.20 lacs E) Rs 4.20 lacs QUESTION 35 - Sahil has informed you that his previous employer has not paid gratuity due to him till this date. Sahil now wants to know if any remedy is available to him in this matter. A) Sahil can go to Civil Court and file a recovery
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suit against the company. B) Sahil can go to Labor Court and file a recovery suit against the company C) Sahil can file a police complaint against his previous employer and get a cheating case registered. D) Sahil can move an application to the Controlling Authority, which may further forward it to the District Collector for recovery of the same from the company. E) I am not attempting QUESTION 36 - Ajay has a net worth of Rs. 2,00,000 at the beginning of the Financial Year 2006-2007. The following transactions occurred during the Financial Year 2006-2007 with respect to his account. 1. Paid off credit card liability worth Rs. 10,000 using savings account 2. Transferred Rs. 4,000 from savings account to PPF account 3. Purchased Rs. 2,000 of furniture with credit. What is the net worth of Ajay after these transactions? A) I am not attempting B) Rs 198000 C) Rs 200000 D) Rs 184000 E) Rs 190000 QUESTION 37 - GOI savings bond A) enjoys tax benefit u/s 80C B) Nomination facility is not allowed C) are issued subject to maximum of Rs 10 lacs per individual D) are subject to wealth tax E) is issued for 6 years QUESTION 38 - Amit is eligible for gratuity as per the provisions of the Payment of Gratuity Act, 1972. Amit's employer has agreed to pay him a gratuity amount that is higher than what is stipulated under the Act. Amit accordingly would receive a final settlement of Rs. 5,00,000/- on retirement. What is the tax status of this amount? A) There is no specific tax exemption for gratuity, in the Income Tax Act. B) I am not attempting C) The gratuity paid is exempt from Income Tax only to the extent of Rs. 3,50,000/-. D) The amount of gratuity payable to him cannot exceed Rs. 3,50,000/-. E) The Income Tax Act will only allow a maximum exemption upto 15 days wages per completed year of service. The rest is taxable.
QUESTION 39 - In case employee pension scheme 1. A child is allowed a minimum pension of Rs 150pm 2. A widow is entitled to a minimum pension of Rs 450pm 3. A totally disabled child is allowed a minimum pension of Rs 250pm 4. All A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 40 - To what extent the employer's contribution to the PF and the Superannuation Schemes is treated as deductible expense? A) 28% of the salary of the employee B) 15% of the salary of the employee C) 12% of the salary of the employee D) 24% of the salary of the employee E) 27% of the salary of the employee QUESTION 41 - Which one of the following statements is NOT true for a defined-benefit plan. (i) It favors older participants. (ii) Contributions are annual & arbitrary. (iii) It requires an actuary. A) Statement 1 is correct B) Statement 3 is correct C) Statement 1 & 3 are correct D) Statement 2 is correct E) Statement 1 & 2 are correct QUESTION 42 - The Post Office MIS accounts of Mayank and Manas were opened on 01-04-2008 and they were receiving Rs 2000 pm as interest. The couple wants to know how much amount will be received from each of these accounts if they are closed on 29.11.2008 A) Rs 3.15 lacs from each account B) No premature closure is allowed in PO MIS account within one year C) Rs 2.97 lacs from each account D) Rs 3.00 lacs from each account E) Rs 2.94 lacs from each account QUESTION 43 - Which of the following statement/s are true?
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1. Any death cum retirement gratuity is exempt from tax upto a maximum of Rs 350000. 2. Leave salary is exempt from tax upto a maximum of Rs 300000. 3. Compensation received on voluntary retirement is exempt from tax upto a maximum of Rs 350000. 4. Retrenchment compensation is exempt from tax upto a maximum of Rs 500000. A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 44 - Annuities where the payments occur at the end of each time period are called ___________, whereas __________ refer to annuity streams with payments occurring at the beginning of each time period. A) ordinary annuities; early annuities B) ordinary annuities; annuities due C) annuities due; ordinary annuities D) late annuities; straight annuities E) straight annuities; late annuities QUESTION 45 - Which of the following statements are correct for recognized provident fund? A) Employee's contribution is eligible for rebate u/s 80C. B) Interest credited in excess of 8.5% to be included in gross salary C) All D) Interest is exempt u/s 10 up to 8.5% p.a E) Employer's contribution is exempt up to 12% of salary and excess of 12% to be included in gross salary of employee QUESTION 46 - Which of the following statement/s are true for negotiable instrument? 1. Cheques are en example of negotiable instrument. 2. A suit cannot be filed for a dishonored cheque 3. It is a contract to pay money 4. Money is a negotiable instrument A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct
QUESTION 47 - Vinita was recently divorced and has two children. The divorce decree requires that she pay 1/3 of the college tuition cost for her children. The tuition cost is currently Rs. 15,000 per year and has been increasing at 7% per year. Her son and daughter are 12 and 16 respectively and will attend college for four years beginning at age 18. How much should she save each month, beginning today for the next five years to finance education for both the children (in nearest rupee)? Assume that her after-tax rate of return will be 9% and that general inflation has been 4% p.a. A) Rs. 745 B) Rs. 750 C) Rs. 2,500 D) Rs. 2750 E) Rs. 2,235 QUESTION 48 - Sunanda has told you that Justice Sharma is willing to open a Senior Citizen Saving Scheme account after his retirement. She wants to know whether the family can also open a separate account in the same scheme in Justice Sharma’s HUF name at the same time. According to you_______. A) No they cannot B) Yes they can. C) Yes, they can but subject to maximum amount deposited in Justice Sharma’s individual account or Rs. 15 lakh whichever is lower D) Yes, they can but subject to maximum amount deposited in Justice Sharma’s individual account or Rs. 15 lakh whichever is higher E) I am not attempting QUESTION 49 - Which of the following statement/s are true? 1. Annuity certain provides a specified amount of monthly income for a specified period of years, without consideration of any life contingency 2. Life Annuity is an annuity, which is paid through the life of the annuitant, till he/she dies. It stops once the annuitant dies 3. Joint Life Annuity is issued on two individuals under which payments continue in whole or in part until both individuals die 4. Under Immediate Annuity, annuity payments are made at the beginning of the period A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct
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D) 4 only correct E) All correct QUESTION 50 - A Provident Fund acquires its status of recognition by ___________.
A) PF Commissioner B) SEBI C) Labour ministry D) IT Authority E) PFRDA
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Name:__________________________ Circle the correct option or options for each question. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44.. 45. 46. 47. 48. 49. 50. A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E
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ANSWERS
QUESTION 1. Correct answer = C QUESTION 2. Correct answer = A QUESTION 3. Correct answer = B QUESTION 4. Correct answer = B QUESTION 5. Correct answer = A QUESTION 6. Correct answer = C QUESTION 7. Correct answer = B QUESTION 8. Correct answer = E QUESTION 9. Correct answer = A QUESTION 10. Correct answer = C QUESTION 11. Correct answer = E QUESTION 12. Correct answer = A QUESTION 13. Correct answer = E QUESTION 14. Correct answer = D
QUESTION 26. Correct answer = B QUESTION 27. Correct answer = A QUESTION 28. Correct answer = B QUESTION 29. Correct answer = D QUESTION 30. Correct answer = A QUESTION 31. Correct answer = E QUESTION 32. Correct answer = E QUESTION 33. Correct answer = B QUESTION 34. Correct answer = E QUESTION 35. Correct answer = D QUESTION 36. Correct answer = C QUESTION 37. Correct answer = E QUESTION 38. Correct answer = C QUESTION 39. Correct answer = D
QUESTION 15. Correct answers: A= T, B = T, QUESTION 40. Correct answer = E C = F, D = F, E = F. QUESTION 16. Correct answer = B QUESTION 17. Correct answer = E QUESTION 18. Correct answer = A QUESTION 19. Correct answer = B QUESTION 20. Correct answer = E QUESTION 21. Correct answer = B QUESTION 22. Correct answer = B QUESTION 23. Correct answer = C QUESTION 24. Correct answer = C QUESTION 25. Correct answer = B QUESTION 41. Correct answer = D QUESTION 42. Correct answer = B QUESTION 43. Correct answer = E QUESTION 44. Correct answer = B QUESTION 45. Correct answer = C QUESTION 46. Correct answer = B QUESTION 47. Correct answer = E QUESTION 48. Correct answer = A QUESTION 49. Correct answer = A QUESTION 50. Correct answer = D
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Retirement Planning Choose the CORRECT option (A-E) listed below, more than one answer may be correct. QUESTION 1 - Which of the following is a defined contribution plan? A) Leave salary B) Gratuity C) Recognized provident fund D) VRS E) Retrenchment compensation QUESTION 2 - Tarun is the nominee in the existing Post Office NSC investments of Ragini. Tarun wants to know in case these NSCs are pledged to a bank for availing a loan, what impact will it have on his nomination in these NSCs. A) His nomination shall stand as it is. B) I am not attempting C) Decision on carry forward of existing nomination upon pledge of NSCs is a privileged right of the Post Master of the Post Office concerned. D) No pledge is permitted for NSC. E) His nomination shall stand cancelled as soon as any pledge is made. QUESTION 3 - Which of the following is true for PPF 1. It enjoys tax benefit u/s 80C 2. Any number of deposits can be made in a financial year 3. Interest is payable @ 8% 4. Interest is compounded half yearly A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 4 - OASIS means in this context: A) A project for the welfare of the child B) The project called Old Age for Social and Income Security C) A project for the welfare of the female child D) A water fall. E) A green patch with water resources in the midst of the desert. QUESTION 5 - Which of the following statement/s are true?
1. An intentional tort involves an action that is carried out voluntarily and with foreknowledge of the wrongful or harmful consequences. 2. An immediate annuity is always purchased with single premium 3. Res ipsa loquitor means that the very fact that the injury or damages occurs establishes a presumption of negligence on behalf of the defendant 4. Imputed negligence are conditions under which negligence committed by one person cannot be attributed to another person
A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 6 - Vishal is working with Amex Ltd since October 1, 1993. He is entitled to a basic salary of Rs. 6,000 per month. Dearness Allowance is 40% of Basic Salary for retirement benefits. He retired from his job on January 1, 2007. He is entitled to the following benefits at the time of retirement. Gratuity = Rs. 98,000. Pension from January 1, 2007 = Rs. 2,000 per month. Payment from recognized PF = Rs. 3,00,000. Encashment of earned leave for 150 days = Rs. 36,000. He was entitled to 40 days leave for every completed year of service. He got 50% of his pension commuted in lump sum w.e.f April 1, 2007 and received Rs. 1,20,000 as commuted pension. Vishal contributes Rs. 900 per month to RPF A) Rs 2000 B) NIL C) Rs 6000 D) Rs 4000 E) Rs 1000 QUESTION 7 - Interest is fully exempt from tax in case of 1. Statutory provident fund 2. Unrecognized provident fund 3. Public provident fund 4. Recognized provident fund A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct
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E) All correct QUESTION 8 - Which of the following statements are true for bonds? 1. When price goes up, yield goes down, and vice versa. 2. Yield is the rate of return you get on a bond. 3. Stocks are equity; bonds are debt. 4. Bonds are not risk free. A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 9 - Ms. Rekha is 45 years old and plans to retire at 50. Her life expectancy is 70 years. Ms. Sushma, her Financial Planner, estimates that her client will require Rs.45,000/- in the first month after retirement. Inflation rate is 4% p.a. and the rate of return is 6% p.a. What will be the savings per year required in order to meet this? A) 1591967 B) 1690000 C) 1480000 D) 1580629 E) 1588730 QUESTION 10 - Raj joins ABC Ltd. on 25th April 1967. ABC has 30 employees. If he is expected to retire on 15th November 2007, and his last drawn salary for gratuity purposes is Rs. 26,000 per month, what would be ABC Ltd's liability on account of Raj's gratuity entitlement if ABC Ltd is covered under the payment of Gratuity Act, 1972? A) 520000 B) 312000 C) 350000 D) 615000 E) 600000 QUESTION 11 - Laxman is an NRI who has been working in the US for the past 5 years. He is aged 40 and has a family of wife and 2 children, aged 14 and 12 to support. He has been saving Rs. 8 lakh per annum for the past 5 years and hopes to save the same amount for the next 10 years that he plans to live in the US. He would like to return to India 10 years from now. The inflation-adjusted monthly income requirement for Laxman, as estimated by the planner, is Rs. 80000 in the year
in which he returns to India. It is estimated that inflation would remain at an average of 3% for the next 30 years. His life expectancy is placed at 70 years. However if the estimated spend per month, for his family is Rs. 90,000 p.m., and the rate of inflation is 4%p.a, how long will the corpus last. A) The funds will last until Laxman is 72 years old. If his life span is only 70 years, he will leave behind an estate of Rs. 10904325. B) The funds will not be adequate to fund his estimated life span of 70 years. He will leave no estate behind for the children. C) The funds will last until Laxman is 81 years old. He will not be able to leave behind any estate for his children. D) I am not attempting E) The funds will exhaust before Laxman is 71 years old. If his life span is only 70 years, he will leave behind an estate of Rs. 987835. QUESTION 12 - A PPF account was opened on 10th July 1990. It will mature on ________. A) 1-4-2006 B) 10-7-2005 C) 9-7-2005 D) 11-7-2005 E) 1-4-2007 QUESTION 13 - In superannuation fund case of an approved
1. Contribution paid by the employee is eligible for tax rebate. 2. Death benefit payable under the fund is exempt from Income Tax. 3. Contribution paid by the Employer is not included in the value of taxable perquisites in the hands of the employee. 4. Commuted Value payable on Retirement at or after a specified age is exempt from income tax. A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 14 - Mr. Ramesh retired from PTC Ltd after completing service of 29 years and 9 months. His salary at the time of retirement was Rs. 10500 per month while the average salary drawn for the preceding 10 months worked out to Rs. 9800 per month. The actual amount of gratuity received by
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him at the time of retirement was Rs. 3.25 lakh. Calculate the amount of gratuity exempt from tax assuming that he is covered by the provisions of Payment of Gratuity Act, 1972? A) Rs. 294000 B) None of the above C) Rs 315000 D) Rs 181730 E) Rs 394000 QUESTION 15 - Mark True & false A) Maturity value of Rs 50000 invested for 5 years @ 8% will be Rs 73466 B) Maturity value of Rs 25000 invested for 3 years @ 6% will be Rs 29775 C) FV of Rs 100 after 5 years @8%pa compounded quarterly will be les than if invested at 8% compounded half yearly D) Saurabh will get Rs 6083 by investing Rs 5000 today for 5 years @5%pa E) Maturity value of Rs 10000 invested for 5 years @ 8% will be 14567 QUESTION 16 - A client has the need to provide for his child's college education costs. He envisages that four annual payments of Rs 20,000/, in current money terms, would be needed beginning 15 years from now. Assuming level of inflation rate at 5% per annum and that the fund earns 8% per annum returns throughout; calculate the present value to be placed on this liability when carrying out a needs analysis for this client. (Round of your answer to the nearest '000') A) 23000 B) 50000 C) 24000 D) 34000 E) 49000 QUESTION 17 - Which of the following is a government security? 1. Dated security 2. Capital indexed bond 3. T Bill 4. 8% Savings bond A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct
QUESTION 18 - Post office recurring deposit account A) allows loan facility B) pays interest @ 8% pa. C) can be opened by an NRI D) enjoys tax benefit u/s 80C E) interest is tax-free QUESTION 19 - In case of Employees Pension Scheme 1995 1. When pension is taken between 50-58 years of age, the amount of pension is reduced by 3% for each year if taken in advance before of 58 years of age. 2. When pension is taken between 50-58 years of age, the amount of pension is reduced by 2% for each year if taken in advance before of 58 years of age. 3. Full pension is calculated amount as per formula if the Pension is taken at 58 years of age 4. On rendering 20 years of Pensionable service or more, member's Pensionable service shall in all cases be reduced by 2 years A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 20 -Post office savings account 1. can be opened with a minimum of Rs 20 2. can have a maximum deposit balance of Rs 1 lac for single holder 3. earns interest @ 3.5% pa 4. can be opened by an individual, HUF & Minor A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 21 - True & False 1. If interest is charged @ 1.5% per month on the outstanding balance of a MasterCard bill, then effective annual rate is equal to 19.56% 2. Rs 4727 will become Rs 7500 in 7 years @ 6% 3. Ram would prefer to earn 20% compounded daily on a money-market account than 21%
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compounded annually for a one-year period. 4. Rs 4987 will become Rs 7500 in 8 years @ 7% A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 22 - Avinash pays his mortgage of Rs. 12 Lakh for 15 years at an interest rate of 7%. Avinash makes the payments on a monthly basis. What is the total amount of interest Avinash will pay over the term of the mortgage? (Select closest answer) A) Rs 647000 B) Rs 741470 C) Rs 776300 D) Rs 730210 E) Rs 697000 QUESTION 23 - Which are true for senior citizen savings scheme A) Premature closure of account is not allowed B) Individual can open only one account C) Enjoys tax benefit u/s 80C D) HUF can open an account under the scheme E) Cannot be extended on maturity QUESTION 24 - (A) If the assignee dies after the death of life assured and before settlement, the policy money would be payable to the heirs of the assignee. (B) If the assignee dies after the death of life assured and before settlement, the policy money would be payable to the heirs of the life assured. A) Both are correct B) I am not attempting C) A is correct D) Both are incorrect E) B is correct QUESTION 25 - Mr. Nirav an affluent broker wants to retire at 45. He wants to maintain his present living standard. He spends Rs.3,25,000/- a year. He is expected to live upto 85. Inflation is to be assumed at 4% and expected returns are 7% p.a. How can he achieve this? He is at present 30 years old. What is the nest egg required at age 45 and what amount should he save every year to meet his plan? His present investments are Rs.10,00,000/-. (Assumption: All computations for interest, spend
and savings compound annually, beginning of the period investment).
assuming
A) Nest egg and savings required will be Rs.1,47,73,065/- and Rs.7,40,530/- respectively. B) Nest egg and savings required will be Rs.1,41,82,819/- and Rs.4,24,865/- respectively C) Nest egg and savings required will be Rs.2, 51,00,065/- and Rs.5, 41,093/- respectively. D) Nest egg and savings required will be Rs.1, 27,73,065/- and Rs.4,38,300/- respectively E) I am not attempting QUESTION 26 - You and your spouse have found your dream home. The selling price is Rs 220,000; you will put Rs 50,000 down and obtain a 30-year fixed-rate mortgage at 7.5% APR for the balance. Assume that monthly payment begins today. What will each payment be? A) 1188 B) 1181 C) 1359 D) 1529 E) 1538 QUESTION 27 - Abhishek has to pay college admission fee of Rs. 80000 for his son for 3 years hence, How much should be save at the end of each month to have this amount after 3 yrs. Assume interest rate of 8% pa A) 1974 B) 1961 C) 1982 D) None E) 1950 QUESTION 28 - Ahmed' current annual expenditure is Rs. 100000/-. He is 30 years old and expects to retire at age 55. His annual expenses are estimated to rise by 6% p.a. and his life expectancy is 75 years. His post retirement annual expenses are estimated to be 80% of his preretirement expenses. What will be his expenses on the first year of his retirement? A) 402350 B) 343350 C) 429187 D) 347425 E) 422560 QUESTION 29 - The cash purchase price of an item is Rs. 2,00,000. The selling company however
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offers installment plan, which allows an immediate payment of Rs. 10,000 and a series of 5 half-yearly payments thereafter. The first installment is payable after one and a half year. If the company wants rate of interest of 10% P.A. compounded half-yearly, what will be the half-yearly installment? A) Rs 50802 B) Rs 45678 C) Rs 29412 D) Rs 48383 E) Rs 43885 QUESTION 30 - In case of Employees' Provident Funds & Miscellaneous Provisions Act, 1952 1. The employer contribute 12% or 10% matching the contribution made by employee 2. If the employee wages are more than 6501, then employer can limit his contribution to 10% or 12% of Rs 6500 3. The employee contribute 12 % of the basic wages, 4. If the employee wages are more than 6501, then employer can limit his contribution to 10% A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 31 - Which of the following statement/s are correct? 1. Equity-Indexed Annuity is a type of deferred annuity that credits interest based upon growth of an equity index. 2. Annuity Certain is the contract that offers the annuitant or the beneficiary (if the annuitant dies) an income for a specified number of years, regardless of the policyholder's life or death. 3. The time between the purchase and pay out period of a deferred annuity is called accumulation phase. 4. The process of converting an annuity from a single sum to take a guaranteed monthly or annual income from the annuity is called annuitization. A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct
QUESTION 32 - Mr. Gaurav is working with APE Ltd. since October 1, 1992. He is entitled for the basic salary of Rs.6000 per month and Dearness Allowance is 40% of Basic Salary for retirement benefits. He retired from his job on January 1, 2006 (3 months before the end of F.Y 2006) and shifted to his village. He is entitled to the following benefits at the time of retirement. Gratuity = Rs. 98000. Pension from January 1, 2005 = Rs. 2000 per month. Payment from recognized PF = Rs. 300000. Encashment of earned leave for 150 days = Rs. 36000. He was entitled to 40 days leave for every completed year of service. He got 50% of his pension commuted in lump sum w.e.f March 1, 2006 and received Rs. 120000. What amount will he get as the tax exemption under the Payment of Gratuity Act, 1972?
A) I am not attempting B) 10 month's average salary C) None of the above D) NIL E) Actual Encashed salary QUESTION 33 - PO time deposit scheme A) enjoys tax benefit u/s 80C B) pays annual interest, which is compounded quarterly C) doesn't allow premature withdrawal D) interest is tax-free E) can be opened for 1,2,3,4 & 5 years QUESTION 34 - Sajid has a pension policy details of which are given as under; Pension policy; 28 year PPT; Non Participating policy; Yearly premium Rs. 10,000; guaranteed returns of Rs. 50/1,000 SA; SA during accumulation phase Rs. 3 Lakh; No riders. What will be the value of the accumulated corpus just on completion of the premium paying term? A) Rs 8.00 lacs B) Rs 4.80 lacs C) Rs 5.60 lacs D) Rs 7.20 lacs E) Rs 4.20 lacs QUESTION 35 - Sahil has informed you that his previous employer has not paid gratuity due to him till this date. Sahil now wants to know if any remedy is available to him in this matter. A) Sahil can go to Civil Court and file a recovery
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suit against the company. B) Sahil can go to Labor Court and file a recovery suit against the company C) Sahil can file a police complaint against his previous employer and get a cheating case registered. D) Sahil can move an application to the Controlling Authority, which may further forward it to the District Collector for recovery of the same from the company. E) I am not attempting QUESTION 36 - Ajay has a net worth of Rs. 2,00,000 at the beginning of the Financial Year 2006-2007. The following transactions occurred during the Financial Year 2006-2007 with respect to his account. 1. Paid off credit card liability worth Rs. 10,000 using savings account 2. Transferred Rs. 4,000 from savings account to PPF account 3. Purchased Rs. 2,000 of furniture with credit. What is the net worth of Ajay after these transactions? A) I am not attempting B) Rs 198000 C) Rs 200000 D) Rs 184000 E) Rs 190000 QUESTION 37 - GOI savings bond A) enjoys tax benefit u/s 80C B) Nomination facility is not allowed C) are issued subject to maximum of Rs 10 lacs per individual D) are subject to wealth tax E) is issued for 6 years QUESTION 38 - Amit is eligible for gratuity as per the provisions of the Payment of Gratuity Act, 1972. Amit's employer has agreed to pay him a gratuity amount that is higher than what is stipulated under the Act. Amit accordingly would receive a final settlement of Rs. 5,00,000/- on retirement. What is the tax status of this amount? A) There is no specific tax exemption for gratuity, in the Income Tax Act. B) I am not attempting C) The gratuity paid is exempt from Income Tax only to the extent of Rs. 3,50,000/-. D) The amount of gratuity payable to him cannot exceed Rs. 3,50,000/-. E) The Income Tax Act will only allow a maximum exemption upto 15 days wages per completed year of service. The rest is taxable.
QUESTION 39 - In case employee pension scheme 1. A child is allowed a minimum pension of Rs 150pm 2. A widow is entitled to a minimum pension of Rs 450pm 3. A totally disabled child is allowed a minimum pension of Rs 250pm 4. All A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 40 - To what extent the employer's contribution to the PF and the Superannuation Schemes is treated as deductible expense? A) 28% of the salary of the employee B) 15% of the salary of the employee C) 12% of the salary of the employee D) 24% of the salary of the employee E) 27% of the salary of the employee QUESTION 41 - Which one of the following statements is NOT true for a defined-benefit plan. (i) It favors older participants. (ii) Contributions are annual & arbitrary. (iii) It requires an actuary. A) Statement 1 is correct B) Statement 3 is correct C) Statement 1 & 3 are correct D) Statement 2 is correct E) Statement 1 & 2 are correct QUESTION 42 - The Post Office MIS accounts of Mayank and Manas were opened on 01-04-2008 and they were receiving Rs 2000 pm as interest. The couple wants to know how much amount will be received from each of these accounts if they are closed on 29.11.2008 A) Rs 3.15 lacs from each account B) No premature closure is allowed in PO MIS account within one year C) Rs 2.97 lacs from each account D) Rs 3.00 lacs from each account E) Rs 2.94 lacs from each account QUESTION 43 - Which of the following statement/s are true?
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1. Any death cum retirement gratuity is exempt from tax upto a maximum of Rs 350000. 2. Leave salary is exempt from tax upto a maximum of Rs 300000. 3. Compensation received on voluntary retirement is exempt from tax upto a maximum of Rs 350000. 4. Retrenchment compensation is exempt from tax upto a maximum of Rs 500000. A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct QUESTION 44 - Annuities where the payments occur at the end of each time period are called ___________, whereas __________ refer to annuity streams with payments occurring at the beginning of each time period. A) ordinary annuities; early annuities B) ordinary annuities; annuities due C) annuities due; ordinary annuities D) late annuities; straight annuities E) straight annuities; late annuities QUESTION 45 - Which of the following statements are correct for recognized provident fund? A) Employee's contribution is eligible for rebate u/s 80C. B) Interest credited in excess of 8.5% to be included in gross salary C) All D) Interest is exempt u/s 10 up to 8.5% p.a E) Employer's contribution is exempt up to 12% of salary and excess of 12% to be included in gross salary of employee QUESTION 46 - Which of the following statement/s are true for negotiable instrument? 1. Cheques are en example of negotiable instrument. 2. A suit cannot be filed for a dishonored cheque 3. It is a contract to pay money 4. Money is a negotiable instrument A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct D) 4 only correct E) All correct
QUESTION 47 - Vinita was recently divorced and has two children. The divorce decree requires that she pay 1/3 of the college tuition cost for her children. The tuition cost is currently Rs. 15,000 per year and has been increasing at 7% per year. Her son and daughter are 12 and 16 respectively and will attend college for four years beginning at age 18. How much should she save each month, beginning today for the next five years to finance education for both the children (in nearest rupee)? Assume that her after-tax rate of return will be 9% and that general inflation has been 4% p.a. A) Rs. 745 B) Rs. 750 C) Rs. 2,500 D) Rs. 2750 E) Rs. 2,235 QUESTION 48 - Sunanda has told you that Justice Sharma is willing to open a Senior Citizen Saving Scheme account after his retirement. She wants to know whether the family can also open a separate account in the same scheme in Justice Sharma’s HUF name at the same time. According to you_______. A) No they cannot B) Yes they can. C) Yes, they can but subject to maximum amount deposited in Justice Sharma’s individual account or Rs. 15 lakh whichever is lower D) Yes, they can but subject to maximum amount deposited in Justice Sharma’s individual account or Rs. 15 lakh whichever is higher E) I am not attempting QUESTION 49 - Which of the following statement/s are true? 1. Annuity certain provides a specified amount of monthly income for a specified period of years, without consideration of any life contingency 2. Life Annuity is an annuity, which is paid through the life of the annuitant, till he/she dies. It stops once the annuitant dies 3. Joint Life Annuity is issued on two individuals under which payments continue in whole or in part until both individuals die 4. Under Immediate Annuity, annuity payments are made at the beginning of the period A) 1, 2, & 3 correct B) 1, & 3 correct C) 2, & 4 correct
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D) 4 only correct E) All correct QUESTION 50 - A Provident Fund acquires its status of recognition by ___________.
A) PF Commissioner B) SEBI C) Labour ministry D) IT Authority E) PFRDA
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Name:__________________________ Circle the correct option or options for each question. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44.. 45. 46. 47. 48. 49. 50. A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E A B C D E
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ANSWERS
QUESTION 1. Correct answer = C QUESTION 2. Correct answer = A QUESTION 3. Correct answer = B QUESTION 4. Correct answer = B QUESTION 5. Correct answer = A QUESTION 6. Correct answer = C QUESTION 7. Correct answer = B QUESTION 8. Correct answer = E QUESTION 9. Correct answer = A QUESTION 10. Correct answer = C QUESTION 11. Correct answer = E QUESTION 12. Correct answer = A QUESTION 13. Correct answer = E QUESTION 14. Correct answer = D
QUESTION 26. Correct answer = B QUESTION 27. Correct answer = A QUESTION 28. Correct answer = B QUESTION 29. Correct answer = D QUESTION 30. Correct answer = A QUESTION 31. Correct answer = E QUESTION 32. Correct answer = E QUESTION 33. Correct answer = B QUESTION 34. Correct answer = E QUESTION 35. Correct answer = D QUESTION 36. Correct answer = C QUESTION 37. Correct answer = E QUESTION 38. Correct answer = C QUESTION 39. Correct answer = D
QUESTION 15. Correct answers: A= T, B = T, QUESTION 40. Correct answer = E C = F, D = F, E = F. QUESTION 16. Correct answer = B QUESTION 17. Correct answer = E QUESTION 18. Correct answer = A QUESTION 19. Correct answer = B QUESTION 20. Correct answer = E QUESTION 21. Correct answer = B QUESTION 22. Correct answer = B QUESTION 23. Correct answer = C QUESTION 24. Correct answer = C QUESTION 25. Correct answer = B QUESTION 41. Correct answer = D QUESTION 42. Correct answer = B QUESTION 43. Correct answer = E QUESTION 44. Correct answer = B QUESTION 45. Correct answer = C QUESTION 46. Correct answer = B QUESTION 47. Correct answer = E QUESTION 48. Correct answer = A QUESTION 49. Correct answer = A QUESTION 50. Correct answer = D
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