Skip to content

NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Debt Management and Loans

Meera takes a loan of Rs 10,00,000 at 12% p.a. with interest calculated monthly on the reducing balance, repayable by EMI. For the first EMI, the interest component is:

The first month's interest is Rs 10,000. With interest on the reducing balance, the monthly rate is 12% divided by 12, which is 1%, applied to the full outstanding principal of Rs 10,00,000. Annual interest of Rs 1,20,000 would be wrong for a single month.

  1. ARs 12,000
  2. BRs 10,000Correct
  3. CRs 1,20,000
  4. DRs 1,000

Explanation

Monthly rate = 12%/12 = 1%. Interest for month 1 = 1% x 10,00,000 = Rs 10,000. Rs 12,000 wrongly uses a rate of 1.2% per month; Rs 1,20,000 is the annual interest.

Did you get it right without looking?

One question tells you little. A timed set on Debt Management and Loans shows your real accuracy, how long you take and where you lose marks.

Practise Debt Management and LoansFree diagnostic mock

More Debt Management and Loans questions