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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Introduction to Personal Financial Planning

Mr. Kulkarni, aged 40, has monthly expenses of Rs 60,000, an emergency fund policy of 6 months of expenses, liquid savings of Rs 2,40,000 and a monthly EMI of Rs 20,000 that is already included in the Rs 60,000 expenses. How much additional emergency corpus does he need?

The additional emergency corpus needed is Rs 1,20,000. Six months of expenses at Rs 60,000 is Rs 3,60,000, with the EMI already included. Subtracting the existing liquid savings of Rs 2,40,000 leaves a shortfall of Rs 1,20,000.

  1. ARs 1,20,000Correct
  2. BRs 3,60,000
  3. CRs 1,60,000
  4. DRs 2,40,000

Explanation

Required corpus = 6 x 60,000 = Rs 3,60,000, since the EMI is already inside the expenses. Shortfall = 3,60,000 - 2,40,000 = Rs 1,20,000. Rs 1,60,000 wrongly adds the EMI again (7 x 60,000 gives 4,20,000, not this), and Rs 3,60,000 ignores existing savings.

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