Documentos de Académico
Documentos de Profesional
Documentos de Cultura
For
CFPCM Certification Education
Program
1. The new Senior Citizen’s Savings Bond Scheme offers ________ % Interest. (1 Mark)
a. 8.5
b. 9
c. 9.25
d. 8.75
2. The maximum amount that can be invested in Public Provident Fund is Rs._____ (1 Mark)
a. 70000
b. 60000
c. 80000
d. 90000
a. A
b. B
c. C
d. None
a. Mutual Funds
b. Stock Brokers
c. Portfolio Managers
d. All of the above
6. A person can be qualified as an Associate Financial Planner after he/she passes modules of
the CFP Certification Course. (1 Mark)
a. 6
b. 2
c. 3
d. 5
Page 2 of 2
8. How many years will it take for a sum of Rs.10000 to double if the rate of return is 9% p.a.?
(2 Marks)
a. 9.5
b. 8.5
c. 10
d. 9
e. 8
9. If the post tax rate of return on an investment is 8% and the inflation rate is 5% the real rate of
return is___ (2 Marks)
a. 3.5%
b. 3.0%
c. 2.86%
d. -3.0%
e. 2.74
10. Seema and Arun are co-applicants of a mortgaged house. They are on the verge of a divorce. The
Housing Finance Company will ___________. (2 Marks)
11. Domestic GOI bond holders (holding them up to Maturity) have to deal with ___________ risk.
(2 Marks)
a. Volatility
b. Default
c. Inflation
d. Price
e. Currency
13. ________________ Asset Allocation is not a text book Asset Allocation Model. (2 Marks)
a. Tactical
b. Discretionary
c. Strategic
d. All of the above
e. None of the above
14. Jack and Jill approach you to be their Financial Planner their funds are limited and their needs
are many.
Some of their needs are: a) To start an investment plan for funding their child.s education; b) To set up
a Testamentary Trust for their child; c) To set up a contingency fund amounting to 3 months of living
expenses d) To start saving for retirement; e) To purchase life and health insurance.
Page 3 of 3
Arrange these needs in the descending order of priority. (2 Marks)
a. c e a d b
b. d e b c a
c. b d e a c
d. b e a c d
15. For a nominal interest rate of 6% payable monthly, quarterly, and semi-annually, the effective
rates respectively would be _______________. (2 Marks)
16. A 10 year 9 % Bond (Face Value of Rs.100, interest payable annually) maturing 3 years from today
is available at a YTM of 5.8%. Therefore the current price is _________ (2 Marks)
a. 102.50
b. 104.09
c. 108.69
d. 110.78
17. Sanjeev invests Rs.5000 in a Bank Deposit today @ 8% p.a compounded monthly. He hopes that
this investment will enable him to fund his college education (estimated to cost Rs.9000), which
commences after 4years. What will be the value of this investment in four years? (4 Marks)
a. 6802
b. 6870
c. 6878
d. 6925
18. Sudha invests Rs.5000 per year (at the beginning of each year) for 5 years @ 5% p.a. in a bank
deposit. She then withdraws the accumulated sum over a period of 3 equal annual installments. What is
the value of the deposit at the end of 5 years and the quantum of withdrawal each year? (4 Marks)
a. 28505, 9954
b. 29010, 10656
c. 29568, 11054
d. 28804, 10042
19. Amar wants to purchase Car 5 years from now. His investments are currently worth Rs.50, 000/-
and he intends to contribute Rs.10, 000/- at the beginning of every six months period to fund his
purchase. Assuming that the annual investment rate of return is 8% compounded semi annually, what
will be the value of the investment in five years time? (4 Marks)
a. 1,98,875
b. 1,95,555
c. 1,97,240
20. Neeta wants to accumulate Rs.1, 50,000 in three years time for a one-month trip to the USA.
Assuming she can get an 8% annual return on her investments, compounded quarterly, how much
must she invest today in order to achieve her goal? (4 Marks)
a. 117591
Page 4 of 4
b. 119487
c. 118274
21. John has estimated that the following will be his outgoings over the next few years:
End of Cash
Year Outflow
1st Rs.10000
2nd Rs.15000
3rd Rs.12000
4th Rs.13500
5th Rs.11000
If John wants to cater to these cash outflows, how much should he have today, assuming an annual rate
of return of 5%? (4 Marks)
a. 54126
b. 53220
c. 52483
d. 50483
22. Mr. John has purchased 100 convertible debentures of Essar Oil on 1/1/94 at Rs.500 each. 40% of
the value of the debentures is convertible into one share of Rs.50 each after seven years. Mr. John
exercised his option on 1/4/2001 and received 100 shares. Compute the cost of acquisition of these
shares. (4 Marks)
a. 200
b. 205
c. 195
d. 185
23. Mohan invested Rs. 420000 for 7 years @ 7% where it was compounded annually for the first
5years and quarterly for the last 2 years. What did he receive on maturity? (4 Marks)
a. 676774
b. 776774
c. 931095
d. 609870
Page 5 of 5
SOLUTIONS
1. b. 9
2. a. 70000
3. d. None
6. b. 2
8. e. 8
Working Note: Use Rule of 72 i.e. r = 72/n Therefore, n = 8 years
9. c. 2.86%
Working Note: Inflation adjusted return: (1+r/1+i). 1; Therefore, (1+0.08/1+0.05). 1 =2.86%
10. a. Not interfere as long as the EMIs are being paid on time
11. c. Inflation
12. a. Borrowing at lower cost in order to pay off higher cost debt
13. b. Discretionary
14. a. ceadb
16. c. 108.69
Working Note: Use YTM Function to get the price.
17. c. 6878
Working Note: Use Future Value Function where PV = Rs.5000; r = 8%/12; n = 48; Therefore, FV=Rs. 6878/-
19. a. 1,98,875
Working Note: PV = Rs.50, 000 Rate of Return = 8%/2 = 4%; No. Of compounding periods = 10; Type of Annuity: Immediate;
Annuity Amount = Rs.10, 000;Therefore the Future Value at the end of five years = Rs.1, 98,875
20. c. 118274
Working Note: PV = To be found Rate of Return = 8%/4 = 2%; No. of compounding periods = 12; Future Value at the end of three years
= Rs.1, 50,000/-; Therefore the amount to be invested today is Rs. 118273.98
21. b. 53220
Family expenses after death of Mr. Joshi will be 3 Lakh (4 Lakh at present less 1 Lakh of Mr. Joshi’s personal expenses) for 40 years. At
3% discount the present value of 3 Lakh for the next 40 years is 69.35 Lakh. Current investment is 20 Lakh + funeral cost will be 1 Lakh.
So Mr. Joshi’s insurance will be (69.35 –20+1) = 50.35 Lakh
22. a. 200
Working Note: Initial Cost: Rs.50000. 40% thereof = Rs.20000. Mr. John gets 100 shares on conversion; Therefore cost per share =
Rs.200.
23. a. 676774
Working Note: Use FV Function; Stage I: PV = Rs. . 420000; r = 7%; n = 5 years; Therefore FV= Rs. 589072; Stage II: PV = Rs. .
589072; I =
(7/100)/4; n = 8 quarters; Therefore FV = Rs. 676774
Page 6 of 6
Module II: Risk Management & Insurance Planning
Questions
1. The process of due diligence conducted by an insurance agent is known as ___ (1 Mark)
a. Underwriting
b. Investigation
c. Inspection
d. Site check
a. Officers Liability
b. Disability Income Protection
c. Health
d. Life
3. Insurable Interest can exist between a Member of Parliament and his (unrelated) party workers.
(1 Mark)
a. True
b. False
c. Data insufficient
4. A person over the age of 60 generally requires _______ Insurance more urgently. (1 Mark)
a. Life
b. Professional Indemnity
c. Long term Care
a. IRDA
b. SEBI
c. Both IRDA & SEBI
6. As per IRDA Regulations, a reinsurance broker must have a minimum paid-up capital of INR
_____ lakhs. (1 Mark)
a. 250
b. 200
c. 50
7. Third Party Administrators directly reimburse the Policyholders for any expenses incurred.
(1 Marks)
a. True
b. False
c. Data Insufficient
8. A young unmarried individual (aged 20-23 years) with no dependents should ideally opt for the
following insurance first. (1 Mark)
a. Property
b. Life
c. Health
Page 7 of 7
9. As per IRDA, the incontestable clause comes into effect after ____ years. (1 Mark)
a. 2
b. 3
c. 4
d. 5
a. Building
b. Home Contents
c. Burglary
d. Jewelry
a. True
b. False
a. Life
b. Health
c. Motor
13. An Insurance Agent must disclose his/her commission to the client in an upfront manner.
(1 Mark)
a. True
b. False
14. Insurance Contracts adhere to Principles laid down in the _____________. (1 Mark)
a. Contract Act
b. Securities Contracts Regulation Act
c. IRDA Act
15. The application of the law of Contract does not apply to ______ contracts.
A. Insurance; B. Stock market; C. Property Deals (2 Marks)
a. A
b. B
c. C
d. None of them
a. Either B or C
b. Only A
c. Only B
17. Ram insures his home worth Rs.50 lakhs for Rs.30 lakhs. The house is destroyed in a fire and he
suffers losses worth Rs. 20 lakhs. How much will he receive from the Insurance Company? (2 Marks)
a. 20 lakhs
Page 8 of 8
b. 16 lakhs
c. 12 lakhs
18. Abraham, 30 years and married, works for a firm, which provides him with medical cover. He
already has his own home and savings of Rs.42 lakhs, which are well invested. In the next twenty years
he will be able to save up enough to fund his retirement and his children’s education. Which of the
following might be the most important insurance for him? (2 Marks)
a. Medical Cover
b. Temporary Total Disablement Cover
c. Property Insurance
d. Life Cover
a. Only B
b. A & C
c. Only C
20. Whenever an insurer partly reinsures the risk with a re-insurer, it is a case of;
A. Risk Retention
B. Risk Transfer
C. Risk Avoidance (2 Marks)
a. A & B
b. A
c. B
d. B & C
21. Two ways of assessing life insurance needs is a need-based approach and the other is the income
replacement method. What in your judgment would be the life cover required for Mr. Joshi on the
basis of each of the two approaches. Mr. Joshi is the sole income earner in the family. Mrs. Joshi is a
homemaker. They are aged 40 and 36 respectively. Life expectancy for both of them is another 40
years. They have no children. Other information you have is: Current investment port folio - Rs.20
lakh; Estimated final Expenses - Rs. 1 lakh.; Present annual expenses-Rs. 4 lakh (including a lakh
of Mr. Joshi 's personal expenses) ; Mr. Joshi 's post-tax income in hand-Rs.3.5 lakh.; Assume a post
tax, post inflation return/discounting factor of 3%.. Calculate the insurance requirement under the
Need Based method. (4 Marks)
a. Rs.46.50 lakhs
b. Rs.75.10 lakhs
c. Rs.69.50 lakhs
d. Rs.50.35 lakhs
22. A group of 50000 persons each aged 35 years wishes to apply for Term Insurance for a one year
period for a sum of Rs.2 lakhs. If the mortality tables show that out of 50 lakh people 30000 die within
a year, find the premium to be paid by each of the 50000 applicants. (4 Marks)
a. 1250
b. 1300
c. 1350
d. 1200
Page 9 of 9
Solutions
1. a. Underwriting
3. b. False
5. a. IRDA
6. b. 200
7. b. False
8. c. Health
9. a. 2
10. a. Building
11. a. True
12. c. Motor
13. b. False
16. a. Either B or C
17. c. 12 lakhs
19. c. C only
20. a. A & B
Page 10 of 10
MODULE III: Retirement Planning & Employee Benefits
Questions
1. Employees Provident Fund is applicable to firms employing over ___________ employees. (1 Mark)
a. 20
b. 15
c. 10
d. 25
2. An employee can contribute beyond ________ of his salary his salary towards EPF but he will get
tax benefits u/s 80 C only up to _________. (1
Mark)
a. 11.33, 11.33
b. 10, 10
c. 12, 12
d. 8.33, 8.33
3. Pension plans eligible for benefit u/s 80 C have a tax-free commutation option up to _________ of
the eligible corpus as at the vesting date. (1 Mark)
a. 30
b. 33
c. 25
d. 35
a. A & C
b. A
c. B
d. B & C
a. Ten
b. Nil
c. Twenty-Five
d. Twenty
e. Thirty-Three
a. Defined Benefit
b. Defined Contribution
c. Combination of Defined Benefit and Defined Contribution
a. Fully exempt
b. Exempt up to a certain ceiling
c. Fully taxable
11. In an inflationary period which of the following statement holds true: (1 Mark)
12. Vinay has been an employee of a public sector undertaking for the past 15 (completed) years and is
retiring on 1st December next year. His firm is not covered under the provisions of the Payment of
Gratuity Act, 1972. Amit's employer has agreed to pay him a gratuity amount of Rs. 5,00,000 on
retirement. What is the tax status of this amount? (2 Marks)
a. The gratuity paid is exempt from Income Tax only to the extent of Rs. 3,50,000.
b. The amount of gratuity payable to him cannot exceed Rs. 3,50,000.
c. The Income Tax Act will only allow a maximum exemption upto 15 day's wages per completed
year of service. The rest is taxable.
13. What will be the effect in terms of buying power on today’s Rs.50000.00 after 15 years if inflation
is 8% p.a? (2 Marks)
14. If the inflation rate is 4.9% and tax rate is 30%. The required rate of return to maintain the value
of an investment is___________. (2 Marks)
a. 8%
b. 9%
c. 7%
d. 10%
15. Seema has been an employee of a public sector undertaking (covered under the payment of
Gratuity Act, 1972) for the past 20 (completed) years and is retiring on the 31st of December this year.
She hopes to invest the proceeds along with the PF proceeds, in order to fund her retirement. Her
monthly salary at retirement is expected to be Rs. 20,000. The amount of gratuity that she will receive
will be ___________________.
Page 12 of 12
(4 Marks)
a. 241245
b. 242308
c. 243579
d. 241940
16. Mrs. Shah retired from Ace Manufacturing Co.Ltd. Mumbai on 31/12/2003. Ace is covered under
the Payment of Gratuity Act, 1972. She served for 30 years and 9 months. Ace paid her a Gratuity of
Rs.400000. Her monthly basic salary at the time of retirement was Rs.9000 p.m. and Dearness
Allowance was Rs.4000 p.m. House Rent Allowance was Rs.1500 p.m. Mrs. Shah lives in an ownership
flat. Compute: Taxable amount of Gratuity Taxable amount of HRA. (4 Marks)
17. Mr. Sachin, aged 30, wants to retire at 45. He wants to maintain his present living standard. He
spends Rs.500000 a year. He is expected to live up to 75. Inflation is to be assumed at 5% and expected
returns are 7% p.a. What is the real rate of return? (4 Marks)
a. 1.75
b. 1.90
c. 2.05
d. 2.15
18. Aditi is 30 years old. She deposits 25000 at the beginning of each year in deferred annuity scheme
as a part of her retirement planning. How much will be in the account after 25 years if it earns 9.5%
compound annual interest? (4 Marks)
a. 2474985
b. 2487216
c. 2414854
d. 2497857
19. Sumeet, aged 25 plans to retire at age 55. His life expectancy is 75. His current annual expenditure
is Rs.250000. He estimates no reduction in his expenses post-retirement. If interest rate is expected to
be 8.5% and inflation is 5% p.a. estimate how much will he have to save per annum in order to achieve
his target, provided he does not wish to leave an estate. (4 Marks)
a. Rs .119568
b. Rs. 125054
c. Rs. 117154
d. Rs. 120963
Page 13 of 13
Solutions
1. a. 20
2. c. 12, 12
3. c. 25
4. a. A & C
5. b. Nil
6. a. Defined Benefit
9. c. Fully taxable
11. b. Nominal interest rates are higher than real interest rates.
12. a. The gratuity paid is exempt from Income Tax only to the extent of Rs. 3,50,000.
14. c. 7%
Working Note: If 4.90% is the post tax rate of returns, then the pre tax nominal return = 4.9%* (100/70) = 7%.
15. b. 242308
Working Note: Gratuity calculation = 15/26*20000*21 = 242308.
17. b. 1.90
Working Note: Nominal return (N) = 7%; Inflation (I) = 5 %; Real Rate = {(1+ N)/ (1+ I)} - 1 = 1.90 %
18. d. 2497857
Working Note: Use FV function; PMT = 25000 Type = 1; n = 25; r = 9.5 %; Hence FV = Rs. 2497857
19. a. Rs .119568
Working Note: In order to find the quantum of saving per annum we need to find 1) The future value of current expenditure (2) The
Present Value of the corpus required in order to fund such expenditure post-retirement (3) The actual quantum of savings required
(PMT).
a. Future Value of Current Expenditure : Rs.10,80,4.86; where the PV = Rs.250000 r = 5% n = 30
b. Find the Present value of Annuity Due for the next 20 years. Use inflation adjusted return. Hence PV (AD) = Rs.16, 114,541;
where inflation adjusted return = 3.33 %, n = 20 years and PMT = Rs.1080486.
c. Now find the quantum to be saved per annum up to the year of retirement i.e. PMT. Hence PMT = Rs.119568; where FV =
Rs.16114541; r = 8.5%; n = 30 years.
Page 14 of 14
MODULE IV: Investment Planning
Questions
a. Zero
b. Single
c. Uneven
d. Even
2. The effective interest rate earned per rupee _______ as the periods of compounding increase.
(1 Mark)
a. Increases
b. Decreases
c. Remains same
d. Decreases for some time and then increases
e. Data insufficient
a. Technical Analysis
b. Modern Portfolio Theory
c. Value Investing Theory
4. In India, Preference shares may be issued for a maximum number of ___________ years. (1 Mark)
a. 12
b. 15
c. 10
d. 20
5. In India, Mutual Funds have recently moved to the concept of ___________AUM calculation.
(1 Mark)
a. Monthly average
b. Month end
c. Fortnightly average
a. Equity
b. Index
c. Debt
a. Systematic
b. Unsystematic
Page 15 of 15
9. __________________measures the caliber of the fund manager. (1 Mark)
a. Beta
b. Delta
c. Alpha
10. The Present Value of a sum of money _________________ as the Discounting Rate
___________________. (1 Mark)
12. A period when an economy is experiencing substantial growth and a declining jobless rate is
called_____________. (1 Mark)
a. Stagflation
b. Deflation
c. Depression
d. Boom
a. Commodities
b. Stocks
c. Stock Index
14. A growth-oriented non-dividend paying share is bought for Rs.250 and sold for Rs. 450 after 5
years, the compound annual growth rate is: (2 Marks)
a. 14.86%
b. 12.47 %
c. 11.50%
d. 10.71%
15. The call option strike price on a share is Rs. 500 and the current share price is Rs. 550. The call
option premium is Rs. 60. The time value of the option is: (2 Marks)
a. 60
b. 10
c. 30
d. 15
16. Mr. A deposits Rs.10,000 in his own PPF account and same amount in his wife’s account. How
much maximum amount can he deposit in his nephew’s name?
(2 Marks)
a. Rs. 20,000
b. Nil
c. Rs. 70,000
d. Rs. 60,000
Page 16 of 16
17. A Rs.100 par value bond having 10 % coupon rate will mature after 7 years. Find the value of the
bond if the discount rate is 8 %. (2 Marks)
a. 109.85
b. 111.41
c. 108.75
d. 110.40
18. A 5 year annual annuity has a yield of 6%. What is the duration? (4 Marks)
a. 2.88 years
b. 2.55 years
c. 3.16 years
d. 1.35 years
19. The price of Stellar Ltd. is currently Rs.40. The dividend next year is expected to be Rs.4.00.
Required return on the stock is 12%. Find the expected growth rate under the Constant Growth
model. (4 Marks)
a. 2.00 %
b. 2.25 %
c. 1.90 %
d. 2.75 %
a. 1.8, 0.60
b. 2.5, 0.75
c. 1.5, 0.25
d. 2.2, 0.5
The risk free rate is 9 %; Calculate Treynor, Sharpe and Jensen measures. (4 Marks)
a. 1.05, 0.10, 4.25
b. 1.33, 0.04, -4.25
c. 1.10, 0.15, -3.75
d. 1.46, 0.09, 3.75
Page 17 of 17
Solutions
1. c. Uneven
2. a. Increases
4. c. 10
5. a. Monthly average
6. d. 10
7. c. Debt
8. b. Unsystematic
9. c. Alpha
11. a. the length of time the investor expects to hold the investment.
12. d. Boom
13. a. Commodities
14. b. 12.47 %
Working Note: Use the RATE Function in Excel. PV = Rs.250; FV = Rs.450; n = 5 years; Hence the CARG = 12.47 %
15. b. 10
Working Note: Option Premium = Intrinsic value + Time value; Intrinsic Value = Spot Rate . Strike Price = 50; Hence Time Value is
60. 50=10
16. b. Nil
Working Note: PPF investments can only be made on behalf of immediate family members.
17. d. 110.60
Working Note: Use the PRICE Function in excel. Eg. For Sett. Date use 4/1/2004 (mm-dd- yyyy). Maturity Date: 3/31/2004;
Rate=Rs.10; Yield=8 %; Redemption Value = Rs.100; Frequency = 1; Hence Price is Rs.110.60
19. a. 2.00 %
Working Note: Use the formula - P0 = D1 / (R- G); Where P0 = 40; D1 = 4.00; R = 12%; Hence G = 2.00 %.
Page 18 of 18
Module V . Tax & Estate Planning
Questions
1. A Resident and Ordinarily Resident Assessee is subject to tax on ________. (1 Mark)
a. A
b. B
c. A, B & C
d. B & C
5. Sec. 88 B provides a rebate of up to _____ % in respect of tax payable in respect of senior citizens.
(1 Mark)
a. 25
b. 50
c. 75
d. 100
a. Interest on PPF
b. Interest on Recognized EPF.
c. Interest on Bank Deposits
a. Director
b. Assessee earning over INR 50000 p.a. as Salary Income
c. Person owning more than 20% voting rights
d. All of the above
Page 19 of 19
8. Since October 1, 2004, Capital Gains on the transfer of _________ are exempt from Long
Term Capital Gains Tax subject to certain conditions. (1 Mark)
a. Property
b. Equity Shares
c. Gold
d. Debt Mutual Funds
10. Mr. Arora has three children. He will be entitled to a maximum rebate of Rs.____________ u/s 88.
(1 Mark)
a. 12000
b. 36000
c. 24000
d. NIL
11. Since October 1 2004, long-term capital loss on sale of equity shares can be set off against long-
term capital gains to the extent of_______________. (1 Mark)
a. NIL
b. 10 %
c. 20 %
d. 30 %
12. If a person inherits a house from his relative, the date of acquisition of the house for the purpose of
capital gains will be_________________. (1 Mark)
a. A
b. B
c. A & B
d. Neither A nor B
14. 2% Education Cess is only applicable to assessees in the highest Tax Bracket.
(2 Marks)
a. True
b. False
c. Applicable only to those in the highest bracket and with income above Rs.8.5 lakhs
d. Applicable only to those in the highest bracket and claiming rebate u/s 88 B or 88 C
e. Applicable only to those claiming rebate u/s 88 D
15. Mr. Shah is an Indian Resident who earns some business from Mauritius. This income is________.
A. Taxable subject to credit given for tax already paid in Mauritius
B. fully Taxable
Page 20 of 20
C. not taxable because India has a Double tax Avoidance treaty with Mauritius
(2 Marks)
a. A
b. B
c. C
d. None of them
a. A
b. B
c. C
d. A, B & C
17. Mr. Shyam leaves India for the first time on 15th April 2003 in order to take up employment in
China. He comes back to India on a personal visit on 10th June 2003 and stays for 150 days in India
Determine his residential status for AY 2004-05:
(2 Marks)
a. Resident
b. Non Resident
c. Resident but not Ordinarily Resident
d. Resident and Ordinarily Resident
18. Vishal submits the following information for AY 2005-06. (a) Net income from salary (after
standard deduction) Rs. 2,50,000 (b) Loss from house property Rs. 10,000 (c) Bank interest Rs. 60,000.
Calculate his gross total income after taking into consideration the eligible set-off of losses.
(2 Marks)
a. Rs.2,50,000
b. Rs.3,10,000
c. Rs.2,60,000
d. Rs.3,00,000
19. Mr. Rao, an American Citizen has parents were both born in Canada and whose paternal
grandfather was born in Karachi in 1930. On 17th July 2003, he came to India to attend a nephew.s
marriage. He left India for the USA on 13th January 2004. His stay in India during the last few
years was: 2002-03 102 days, 2001-02 95 days, 2000-01 130 days, 1999-2000 40 days. What is the
residential status of Mr. Rao for A.Y. 2004-05?
(2 Marks)
a. Non Resident
b. Resident and Ordinarily Resident
c. Resident but not Ordinarily Resident
20. Ram has a house property whose Municipal Valuation is Rs.140000 whereas the fair rent of the
house is Rs.160000 and Standard Rent is Rs.145000. Rakesh has paid municipal taxes of Rs.14000.
Based on the above data, answer the following: If actual rent receivable is Rs.180000, find the Gross
Annual Value of the property. (4 Marks)
a. 180000
b. 145000
c. 140000
d. 166000
21. Ram has a house property whose Municipal Valuation is Rs.140000 whereas the fair rent of the
house is Rs.160000 and Standard Rent is Rs.145000. Rakesh has paid municipal taxes of Rs.14000.
Page 21 of 21
Based on the above data, answer the following: If actual rent receivable is Rs.130000, the GAV is
_______________. (4 Marks)
a. 145000
b. 130000
c. 129000
d. 114000
22. Ram has a house property whose Municipal Valuation is Rs.140000 whereas the fair rent of the
house is Rs.160000 and Standard Rent is Rs.145000. Rakesh has paid municipal taxes of Rs.14000.
Based on the above data, answer the following: If the annual rent of property is Rs.180000 and
Unrealized Rent is Rs.60000, the GAV is_______. (4 Marks)
a. 145000
b. 180000
c. 120000
d. 131000
23. Ram has a house property whose Municipal Valuation is Rs.140000 whereas the fair rent of the
house is Rs.160000 and Standard Rent is Rs.145000. Rakesh has paid municipal taxes of Rs.14000.
Based on the above data, answer the following: If the annual rent = Rs.180000 and unrealized rent =
Rs.60000, the Net Annual Value is____________________ (4 Marks)
a. 145000
b. 131000
c. 160000
d. 180000
24. Ram has a house property whose Municipal Valuation is Rs.140000 whereas the fair rent of the
house is Rs.160000 and Standard Rent is Rs.145000. Rakesh has paid municipal taxes of Rs.14000.
Based on the above data, answer the following: If Ram used the house for his own residential purpose
the GAV of the house will be_______. (4 Marks)
a. 145000
b. NIL
c. 180000
d. 131000
25. Munir borrowed Rs.20, 00,000 @ 9% p.a. on 1/10/1998 for construction of a house property which
was completed on 30/09/2003. The loan is still not repaid in full. What is the amount of deduction on
account of pre-construction interest for AY 2004-05 that he can avail of Rs. _________. (4 Marks)
a. 162000
b. 810000
c. 30000
26. Munir borrowed Rs.20, 00,000 @ 9% p.a. on 1/10/1998 for construction of a house property which
was completed on 30/09/2003. The loan is still not repaid in full. If this property was self-occupied then
deduction on interest paid on borrowed capital is restricted to Rs.________________. (4 Marks)
a. 150000
b. 30000
c. 162000
d. 810000
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27. Munir borrowed Rs.20, 00,000 @ 9% p.a. On 1/10/1998 for construction of a house property
which was completed on 30/09/2003. The loan is still not repaid in full. If the property was let out, the
deduction on borrowed capital for AY 2004-05 would be______________ (4 Marks)
a. 150000
b. 30000
c. 342000
d. 810000
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Solutions
1. d. All of the above
3. d. B & C
4. b. 10000
5. d. 100
8. b. Equity Shares
10. c. 24000
11. a. NIL
13. c. A & B
14. b. False
15. a. A
16. d. A, B & C
18. d. Rs.3,00,000
Working Note: Loss from Income from House property is allowed to be set off against salary income. Hence the GTI = Salary Income .
Loss from House Property + Income from bank Deposits. Hence the Gross Total Income is Rs. 3,00,000.
20. a. 180000
Working Note: Mr.Rao has been in India for 181 days in AY 2004-05. While it is true that he has been in India for 367 days in the four
years preceding PY 2003-04 and has been in India for over 60 days in PY 2003-04, he cannot be considered as Resident.
This is because his grandfather was born in undivided India and so that makes Mr.Rao a Person of Indian Origin. PIOs are considered
as Residents only if they have been in India for 182 days or more during the relevant Previous Year. As Mr.Rao has been in India for
only 181 days, he is considered as a Non Resident for AY 2004-05.
GAV = Higher of Standard Rent and Actual Rent. Hence GAV is Rs.180000.
21. a. 145000
Working Note: Actual Rent = Annual Rent . Unrealized Rent i.e. Rs.120000. As the actual rent is less than the Standard Rent for a reason
other than vacancy, the GAV is Rs.145000.
22. a. 145000
23. b. 131000 . Working Note: The GAV is Rs.145000. Taxes paid = Rs.14000. Therefore Net Annual Value = Rs.131000.
24. b. NIL . Working Note: NIL, as the GAV of self occupied property is NIL.
25. a. 162000
Working Note: He can apportion this pre-construction period interest in five equal installments commencing from AY 2004-05.
Therefore the amount of annual deduction will be Rs.162000, i.e.810000/5) .The annual interest payments since PY 1998-99 are:
Rs.90000 + Rs.180000+Rs.180000+Rs.180000+Rs.180000 = Rs.810000.
26. b. 30000
Working Note: If this property was self occupied then deduction for borrowed capital is Rs.30000.
27. c. 342000
Working Note: If the property was let out, the deduction on borrowed capital for AY 2004-05 would be 180000 as current period
interest + 162000 as pre construction period interest. Total = Rs.342000.
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