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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Evaluating the Financial Position of Clients

Arjun Patel (Caselet) has monthly gross income Rs 1,50,000, monthly savings Rs 30,000, monthly essential expenses Rs 60,000, EMIs Rs 40,000 and liquid assets Rs 4,80,000. Monthly expenses for emergency purposes are taken as essential expenses plus EMIs. For how many months can he sustain these outgoings from liquid assets, and what is his savings ratio?

He can sustain 4.8 months with a savings ratio of 20 percent. Outgoings are Rs 1,00,000 a month (essentials plus EMIs), so Rs 4,80,000 covers 4.8 months; savings of Rs 30,000 over income of Rs 1,50,000 is 20 percent.

  1. A8 months; 20%
  2. B4.8 months; 20%Correct
  3. C4.8 months; 25%
  4. D8 months; 25%

Explanation

Monthly outgoings = 60,000 + 40,000 = Rs 1,00,000. Liquidity = 4,80,000 / 1,00,000 = 4.8 months. Savings ratio = 30,000 / 1,50,000 = 20%. Using only essential expenses gives 8 months, a missed-EMI error; 25% would wrongly use a different base.

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