Date: 7th October 2023
INDIAN INSTITUTE OF TECHNOLOGY MANDI
HS 504 – Personal Finance and Portfolio Management
Duration: 1 Hour Max. Marks: 50
(40% of the final marks)
Name: Roll Number :
GENERAL INSTRUCTIONS
a) You should not have a mobile phone or any other device with you during the exam.
b) All questions are compulsory.
c) There is a negative marking for the wrong answer. One (1) mark will be given for each
correct answer, and 0.25 marks will be deducted for each incorrect answer.
d) Unanswered questions will carry zero marks.
e) Questions 45 and 46 requires to be written in values.
Q.1 How long do you have to stay abroad in a financial year to be considered an NRI for financial
purposes if you move abroad?
(A) 183 days (B) 30 days
(C) 90 days (D) 365 days
Q.2 You can obtain the following types of credit cards as an NRI.
(A) Secured (B) None
(C) Non secured (D) Any
Q.3 Objectives of financial planning are
(A) Determining capital structure (B) Framing loan policies
(C) Determining cash requirements (D) Determining finance ratio
Q.4 The basic criteria for the extension of credit to customers is
(A) Credit standards (B) financial position
(C) Cash standards (D) living standards
Q.5 Factors that influence the inflation
(A) Foreign Economy (B) Infrastructure building
(C) Government scheme (D) None of these
Q.6 Inflation is measured through
(A) PPI (B) CPI
(C) Both (D) None of these
The time value of money indicates that
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Date: 7th October 2023
Q.7 (A) A unit of money obtained today is worth (B) A unit of money obtained today is worth more
less than a unit of money obtained in the than a unit of money obtained in the future
future
(C) There is no difference in the value of (D) None of the above
money obtained today and tomorrow
Q.8 Which of the following risks is within our control
(A) Interest Rate Risks (B) Inflation Risk
(C) Income Risk (D) Emergency Fund Risk
Q.9 Term plans may offer
(A) Accidental Disability Accidental (B) critical illness
Disability
(C) Accidental death benefit (D) None
Q.10 Benefits of Endowment Plan
(A) High-risk investment because linked with (B) Tax-free under section 10(10D)
market
(C) Less expensive (D) None of the above
Q.11 The time value of money facilitates the comparison of cash flows recorded at various time periods
by
(A) Compounding all cash flows to a (B) Discounting all cash flows to a common point
common point of time of time
(C) Using either a or b (D) None
Q.12 As per the Insurance Act, every insurer has to prepare at the end of the financial year
(A) Profit Account (B) Income sheet
(C) Revenue Account for each class of (D) All of the above
Insurance business
Q.13 The risk which arises because of change in major economic. Social, cultural and political factors
are
(A) Particular Risk (B) Fundamental Risk
(C) Dynamic Risk (D) None
Q.14 Which point should be remembered during the purchase of health insurance?
(A) Claim process and the waiting period of (B) Payment and co-payment clause
disease
(C) renewable and critical illness policy. (D) All
Q.15 Which of the following is a secondary function of the bank?
(A) Granting Loans and advances (B) Financial security
(C) Periodic collection of funds (D) All of the above
Q.16 Factors that determine the premium of health insurance
(A) Pre existing disease (B) Family size
(C) Location (D) All of the above
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Date: 7th October 2023
Q.17 Which of the following statements is true for the Role of RBI?
(A) They settle the payment of the customers (B) They form the Financial Regulation and
as well as banks Supervision
(C) They are not involved in the market (D) All
operation
Q.18 Which of the following are regulatory bodies of Banking and finance in India?
(A) RBI (B) SIDBI
(C) Both (D) None
Q.19 What are the properties of Present Value?
(A) If the interest rate is lower, the present (B) Money's worth diminishes in proportion to its
value will be lower. present value.
(C) The money received after a longer period (D) All
will have the same present value
Q.20 Which of the following cards debits the cardholder's account as soon as each transaction is reported
to the issuer?
(A) Credit card (B) Debit card
(C) smart card (D) All
Q.21 The bank's credit risk is higher
(A) Credit Card Holder (B) Debit card holder
(C) Both (D) None
Q.22 The government regulates financial markets for two reasons which are?
(A) ensure the soundness of the financial (B) increase the information available to the
system investor
(C) create a sound atmosphere (D) Both A and B
Q.23 Which of the following is true regarding Certificate of Deposit
(A) No Timeline (B) Minimum investment: 1 Lakh (multiples of 1
Lakh)
(C) Financial market (D) None
Q.24 The certificate of deposits which are usually negotiable are issued by?
(A) Stock Exchange (B) Bank
(C) The gains or benefits that the customer (D) The customers’ involvement with their kids
can get out of the service
Q.25 In Treasury bills, there is a tax deduction at source like bank FDs but the tax rate is less as
compared to the FDs at the end of the financial year.
(A) True
(C) False
The negotiable deposit certificates are traded in
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Date: 7th October 2023
Q.26 (A) secondary market (B) Primary market
(C) Direct Market (D) Any one of the above
Q.27 Which among the following is not a type of treasury bill issued in India?
(A) 365 days (B) 182 days
(C) 91 days (D) None of the above
Q.28 How does demand-pull inflation occur?
(A) Decrease in consumer demand (B) Increase in the money supply
(C) Decrease in production costs (D) Excessive consumer spending
Q.29 Which tool is used to control inflation by adjusting interest rates?
(A) Monetary policy (B) Open market operations
(C) Fiscal policy (D) Quantitative easing
Q.30 Which of the following is a consequence of high inflation?
(A) Increased purchasing power (B) Lower interest rates
(C) Erosion of savings (D) Deflationary pressures
Q.31 If you are planning to own a home through a mortgage, how does the mortgage impact your net
worth?
(A) Increases net worth (B) Decreases net worth
(C) No impact on net worth (D) Depends on the home's market value
Q.32 Which of the following is an example of a liquid asset?
(A) Real Estate (B) Savings Account
(C) Retirement Account (D) Collectibles
Q.33 What risk is associated with the possibility that a borrower may default on a loan or fail to meet
financial obligations?
(A) Market Risk (B) Interest Rate Risk
(C) Credit Risk (D) Inflation Risk
Q.34 How often should you reassess the size of your emergency fund?
(A) Every decade (B) Annually
(C) Quarterly (D) Only when facing a financial crisis
Q.35 Where is the best place to keep your emergency fund?
(A) Current account (B) Savings account
(C) High-yield Stocks (D) Money Market
Q.36 What is the primary purpose of term life insurance in India?
(A) To accumulate cash value (B) To provide lifelong coverage
(C) To protect against premature death (D) To guarantee investment returns
during a specific term
What is the difference between endowment and term life insurance policies in India?
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Date: 7th October 2023
Q.37 (A) Premium amounts (B) Number of premium payments
(C) Maturity benefit (D) All of the above
Q.38 What is the purpose of a "Co-payment" clause in health insurance policies?
(A) To share the cost of medical expenses (B) To provide additional coverage for critical
with the insurer illnesses
(C) To waive the waiting period for certain (D) To limit the total pay-out for specific
conditions treatments
Q.39 Sunaina needs to be hospitalized today (7th October 2023) because of an emergency. Her medical
insurance renewal was supposed to be done by October 1, 2023. It is possible for her to get
coverage under her medical insurance even though he forgot to renew it
(A) True (B) False
Q.40 What is a balance transfer feature on a credit card primarily used for?
(A) Earning cashback rewards (B) Transferring outstanding balances from one
card to another
(C) Increasing the credit limit (D) Availing travel benefits
Q.41 What is the purpose of a secured credit card in personal finance?
(A) To earn higher reward points (B) To access exclusive lifestyle benefits
(C) To establish or rebuild credit history (D) To enjoy a lower annual fee
Q.42 How does a high credit score impact loan interest rates in India?
(A) It has no effect on interest rates (B) It leads to lower interest rates
(C) It results in higher interest rates (D) It only affects the loan approval process
Q.43 Your Credit Score is your ----- for bankers/lenders
(A) Resume (B) Identity
(C) Passport (D) Invitation
Q.44 Mr. Sujay has an annual salary of Rs 18 lakhs. His monthly expenses, including rent, are Rs 40,000.
He has purchased an apartment that is currently under construction; however, the EMI of Rs 30,000
will begin the following month. He has a fantastic deal on a new luxury apartment (with no down
payment) and he might begin an additional EMI of Rs 67,000. Should he invest in the new
apartment?
(A) Yes (B) No
Q.45 What should be his emergency fund value?
Q.46 How much life cover should Mr Sujay opt for?
Q.47 Which financial instrument is utilized when Government is willing to raise funds for ultra short
term?
(A) Cash management bills (B) G-Sec
(C) Bonds (D) Gilt Funds
The total expenses ratio is directly proportional to AUM
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Date: 7th October 2023
Q.48 (A) True (B) False
Q.49 What is the Net Asset Value (NAV) in a mutual fund?
(A) The total number of units outstanding (B) The per-unit market value of the fund's assets
(C) The Asset Under Management (D) The total market value of the fund's assets
Q.50 The difference between the lending interest rate and interest rate for deposit is bank _____.
(A) Profit (B) Revenue
(C) Margin (D) Expense
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