Chapter 7: Financial Mathematics — Online MCQ Test
BUSINESS MATHS AND STATISTICS · CLASS 11th · Tamil Nadu State Board
Practice Chapter 7: Financial Mathematics with a free chapter-wise online MCQ test.
This chapter covers: Focusing on financial calculations this chapter details annuity types present value future value and sinking funds. Students analyze stocks shares debentures dividend yields and br....
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Chapter 7: Financial Mathematics — Important Questions & Answers
An annuity where the payments are made at the end of each period is called ____.
- A. Annuity Due
- B. Ordinary Annuity
- C. Deferred Annuity
- D. Perpetuity
Answer: B. Ordinary Annuity
An ordinary annuity (or annuity immediate) involves payments at the end of each period, whereas annuity due involves payments at the beginning.
An ordinary annuity (or annuity immediate) involves payments at the end of each period, whereas annuity due involves payments at the beginning.
Which of the following terms refers to the amount of money set aside periodically to accumulate to a specific future sum?
- A. Sinking Fund
- B. Present Value
- C. Market Value
- D. Dividend
Answer: A. Sinking Fund
A sinking fund is a fund established by an economic entity by setting aside revenue over time to fund a future capital expense or repayment of a long-term debt.
A sinking fund is a fund established by an economic entity by setting aside revenue over time to fund a future capital expense or repayment of a long-term debt.
If the market value of a share is less than its face value, the share is said to be sold at ____.
- A. Premium
- B. Par
- C. Discount
- D. Brokerage
Answer: C. Discount
When market price is lower than face value, the stock is trading at a discount.
When market price is lower than face value, the stock is trading at a discount.
If an investor buys a share of Rs. 100 at a premium of Rs. 20, the cost of purchase excluding brokerage is ____.
- A. Rs. 80
- B. Rs. 100
- C. Rs. 120
- D. Rs. 20
Answer: C. Rs. 120
When shares are bought at a premium, the market price is Face Value + Premium = 100 + 20 = 120.
When shares are bought at a premium, the market price is Face Value + Premium = 100 + 20 = 120.
Which scenario results in the highest effective cost to a buyer when purchasing shares?
- A. Buying at par
- B. Buying at discount
- C. Buying at premium with brokerage
- D. Buying at par with no brokerage
Answer: C. Buying at premium with brokerage
Premium increases the purchase price, and brokerage adds further to the total cost paid by the investor.
Premium increases the purchase price, and brokerage adds further to the total cost paid by the investor.