FINANCIAL EDUCATION AND INVESTMENT AWARENESS

MCQS MODULE 1
1. If you invest Rs 100000 at an interest rate of 8% pa compounded annually, how many years
it will take to double?

A) 5 B) 6 C) 9 D) 15 (ANS C)

(USE RULE OF 72 72/8=9)

2. Which of these is not considered as technological factor under micro environment factors?
A) Wireless charging B) Engine efficiency C) Security in cryptography D) None

(ANS D)

3. Bank rate means

A) Borrowing Rate by banks from RBI without Collateral
B) Borrowing Rate by banks from RBI with Collateral
C) RBI borrowing Rate
D) None

(ANS A)

4. Custom duty comes under which types of tax in India?

A) Direct Tax B) Indirect Tax C) Provisional Tax D) None (ANS B)

5. What is the compound interest on Rs 10000 for 2 Years at 10% per annum compounded
annually?
A) 2100 B) 12100 C) 2000 D) 12000 (ANS A)

A=P(1+R)N A=10000(1+0.1)2
=10000(1.1)2
= 10000(1.21)
= 12100
Compound Interest= A – P
CI= 12100-10000
= 2100
6. If you invest Rs 10000 for 2 Years at 10% per annum compounded annually what is the
maturity amount you will get after 2 years?
A)2100 B) 12100 C) 2000 D) 12000 (ANS B)

A=P(1+R)N A=10000(1+0.1)2
=10000(1.1)2
= 10000(1.21)
= 12100
7. Which of the following is an example of income?
A) Wages B) Salary C) Commission D) All of these E) None of these (ANS D)

8. Which of the following is an example of business expense? (ANS D)

A. Payment of Wages/salary
 B. Factory /Office lease/ rent payment
C. Payment made to vendors
D. All of the above

9. Revenue Expense means (ANS A)

A. Expenditure that does not create any asset
B. Expenditure that creates an asset
C. Long term expense
D. Non-Recurring Expense
10. Capital Expenditure means (ANS B)
A. Expenditure that does not create any asset
B. Expenditure that creates an asset
C. Recurring Expense
D. Short Term Expense

11. Savings means (ANS A)

A) Unspent amount B) Spent amount C) Lottery amount D) None
12. Savings in general terms (ANS A)
A. Income – Expense
B. Sales – profit
C. Expense – Income
D. None
13. Savings= Income- expense, but in personal finance ( ANS B)
A. Income- Expense
B. Income- Savings = Expense
C. Savings – Expense
D. None
14. Which of the following is factors of production? (ANS E)
A) Land B) Labor C) Capital D) Entrepreneurship/Organization E) All of the above
15. What is time value of money? (ANS A)
A. The money available in present time is worth more than same amount in Future
B. The money available in future is worth more than Money available today
C. Depreciation
D. Appreciation
16. Future cash inflows are discounted by a relevant rate to reach their present value. The rate
is known as
A) Discount Rate B) Compound Rate C) Base Rate D) Repo Rate (ANS A)
17. Present cash inflows are increased at a relevant rate to reach their future value. The rate is
called as
A) Discount Rate B) Compound Rate C) Base Rate D) Repo Rate (ANS B)

18. Expand CAGR (ANS B)

A) Compounded Average Growth Rate
B) Compounded Annual Growth Rate
C) Commuted Annual Growth Rate
D) Commission Annual Growth Rate
19. Expand GST ( ANS A)
A. Goods and Service Tax
 B. Graham and Stive Tax
C. Growth and Service Tax
D. Goods and Savings Tax

20. Which of the Following is not a macro environmental factor affecting investment decision?
(ANS D)
A) Demographic and Technology
B) Natural and Physical factors
C) Political, legal and Economic Factor
D) Financial Goal and Their timing
21. Age, language, lifestyle, cultural differences etc are ( ANS A)
A. Demographic Factors
B. Economic Factors
C. Natural Factors
D. Political Factors
22. Innovation, automation, internet facilities are (ANS D)
A) Demographic Factors
B) Economic Factors
C) Natural Factors
D) Technology Factors

23. Natural resources, weather, pollution etc are (ANS C)

A) Demographic Factors
B) Economic Factors
C) Natural Factors
D) Technology Factors

24. Employment laws, copy right laws, labor laws etc are (ANS D)
A. Demographic Factors
B. Economic Factors
C. Natural Factors
D. Political and Legal Factors
25. Life Expectancy, Social status, buying habits etc are (ANS C)
A) Demographic Factors
B) Economic Factors
C) Social and Cultural Factors
D) Technology Factors

26. Demand and supply, inflation, interest rates are (ANS B)

A) Demographic Factors
B) Economic Factors
C) Natural Factors
D) Technology Factors

27. Two main indicators of inflation in India (ANS A)

A) Wholesale price Index and Consumer Price Index
B) Consumer and Seller Price Index
C) Growth and Wholesale Index
 D) None
28. Which of these are/is scheduled commercial banks? (ANS D)
A) Union Bank of India
B) Standard Charted Bank
C) IndusInd Bank
D) All of these

29. Which of the following doesn’t carry any interest? (ANS A)

A) Current account B) SB account C) FD D) RD
30. In which year RBI Act was enacted? ( ANS B)
A) 1951 B) 1934 C) 1938 D) 1944
31. ATM stands for ( ANS B)
A) Any Time Money B) Automated Telling Machine C) Arithmetic Telling Machine D) None
32. Overdraft facility available in PMJDY account (ANS C)
A) Up to Rs 1000 B) Up to Rs 100000 C) Up to Rs 10000 D) Up to Rs 50000
33. Which of the following is/are not a function of Banks? (ANS E)
A) Acceptance of Deposit
B) Giving Loans
C) Agency and Utility Services
D) Payment and Withdrawal
E) None of the above
34. Expand NRO account (ANS A)
A) Non-Resident Rupee (Ordinary) Account
B) Nil Rupee Ordinary Account
C) Non-Resident Ordinary account
D) None
35. FCNR account stands for (ANS A)
A) Foreign Currency Non-Resident account
B) Foreign Currency Non-Russian Account
C) Foreign Currency National Account
D) Foreign Currency Namibian Account
36. NRE account stands for (ANS C)
A) Non-Russian Rubel External Account
B) Non-Resident Rand External Account
C) Non-Resident Rupee External Account
D) None
37. Who can Open NRE account? (ANS A)
A) NRI B) Anyone C) Indian D) Resident Indian
38. Who can open NRO account? (ANS D)
A) NRI B) Resident before becoming NRI C) American only D) Both A & B
39. Minimum Balance required to be maintained in PMJDY account? (ANS A)
A) No Minimum balance B) 1000 C) 100 D) 500
40. DBT stands for (ANS A)
A) Direct Benefit Transfer
B) Direct Bank Transfer
C) Direct Benami Transfer
D) Direct Ban Transfer
41. Accident Insurance Cover available for PMJDY account after 28-08-2018 (ANS B)
 A) 100000 B) 200000 C) 250000 D) 500000
42. Expand the following
a) PMJJBY- PRADHAN MANTRI JIVAN JYOTHI BHIMA YOJANA
b) PMSBY- PRADHAN MANTRI SURAKSHA BHIMA YOJANA
c) APY- ATAL PENSION YOJANA
d) MUDRA- MICRO UNITS DEVELOPMENT AND REFINANCE AGENCY BANK
e) MICR- MAGNETIC INK CHARACTER RECOGNITION
f) CTS- CHEQUE TRUNCATION SYSTEM
g) ECCS- EXPRESS CHEQUE CLEARING SYSTEM
h) ECS- Electronic Clearing SYSTEM
i) NATCH- NATIONAL AUTOMATED CLEARING HOUSE
j) RTGS- REAL TIME GROSS SETTLEMENT
k) NEFT- NATIONAL ELECTRONIC FUND TRANSFER
l) IMPS- IMMEDIATE PAYMENT SERVICE
m) UPI- UNIFIED PAYMENT INTERFACE
n) PPI – PREPAID PAYMENT INSTRUMENT
o) CRR- CASH RESERVE RATIO
p) SLR- STATUTORY LIQUIDITY RATIO
q) MSF- MARGINAL STANDING FACILITY
43. What is CRR? (ANS A)
A) Percentage of a banks total deposits that needs to be maintain as liquid cash
B) Minimum reserve required to be maintained by banks
C) Central bank’s Lending Rate
D) Commercial Bank lending rate
44. What is Bank Rate? (ANS C)
A) Percentage of a bank’s total deposits that needs to be maintain as liquid cash
B) Minimum reserve required to be maintained by banks
C) Central bank’s Lending Rate
D) Commercial Bank lending rate

45. What is Repo Rate? (ANS C)

A) Percentage of a bank’s total deposits that needs to be maintain as liquid cash
B) Minimum reserve required to be maintained by banks
C) Central bank’s Lending Rate with security
D) Commercial Bank lending rate

46. Who are stakeholders of company? (ANS A)

A) Person or group who have Vested Interest in company

B) Person or group who do not have Vested Interest in company

C) Share holders

D) Account Holders

47. Which of the following is/are Key financial Statements? (ANS D)

A) Balance Sheet

B) Income Statement
 C) Cash Flow statement

D) All of the above

48. Purpose of Preparing Income Statement (ANS C)

A. Ascertain Profit

B. Ascertain Loss

C. Ascertain Profit/Loss

D. None

49. Balance sheet Contains the following (ANS D)

A. Assets B. Liabilities C. Equity and Reserves D. All of the above

50. A cash flow statement contains cash from (ANS D)

A. Operating Activities B. Investing activities C. Financing Activities D. All

51. Purchase of Raw Materials, Labor cost advertising where will write this? (ANS A)

A. Operating Activities B. Investing activities C. Financing Activities D. NONE

52. Purchase of Machines, Plant equipment where will you write this? (Ans B)

A. Operating Activities B. Investing activities C. Financing Activities D. NONE

53. Getting loans, payment of dividend where will you write these? (ANS C)

A. Operating Activities B. Investing activities C. Financing Activities D. NONE

54. ASSETS = Liabilities + (ANS A)

A. shareholders fund B. Equity C. Debt D. Current liabilities

55. Shareholders fund = (ANS A)

A. Equity + reserves and surplus+ retained earnings- debit balance in Profit and Loss account

B. Assets + liabilities

C. Fixed Assets + Current Assets

D. None

56. Retained Earnings = (ANS A)

A. Earning after tax – Dividend

B. Earning before tax – Dividend

C. EBIT- INTEREST

D. Assets - Liabilities

57. Earning After Tax= (ANS A)

 A. EBITDA – INTEREST - TAXES - DEPRECIATION – AMORTISATION

B. EBITDA +INTEREST + TAXES +DEPRECIATION +AMORTISATION

C. EBT-INTEREST

D. EBIT- AMORTISATION

58. Important Ratios

1.Current Ratio= Current Assets/ Current Liabilities

2. Liquid Ratio= Liquid Assets/ Current Liabilities

3. Debt Equity Ratio= Total Long-Term Debt/ Shareholders fund

4. Return on Equity Ratio= Profit after Tax/ Equity Share Capital

5. ROCE= EBIT/ Total Capital Employed

6. Inventory Turnover Ratio= Cost of Goods sold/ Average Inventory

7. EPS = Surplus profit/No of Equity shares o/s

8. Gross Margin Ratio= Gross Margin/ Net Sales

9. Gross Margin= Net sales – Cost of Goods sold

10.Net sales = Gross sales – Sales return

11. Net Margin Ratio= Net Profit/ Total Sales

59. Two types of trend analysis

1. Horizontal Analysis 2. Vertical Analysis

60.The present value of a goal is Rs 2000000-time horizon of Goal is 3 years rate of inflation 6.5%
what is future value of goal? ( ANS A)

A. 24,16,000 B. 2400000 C. 8900000 D. 1655000

Future Value of Goal= PV of goal (1+Inflation Rate)Years to goal

= 2000000(1+0.065)3

61. Net worth of a person = (ANS A)

A. Total Assets- Outstanding Liabilities

B. Total Assets – Personal expense

C. Total Assets + Liabilities

D. None
62. which of the Following is the good example of financial plan? (ANS A)

A. 3 lakhs required after 2 years to meet household expense

B. 4lakhs required

C. Amount Required for Higher Education D. None