Skip to content

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

Ms. Kavita Nair earns a gross monthly income of ₹1,00,000 and takes home ₹85,000 after tax and deductions. She pays EMIs of ₹12,000 on a car loan and ₹18,000 on a home loan every month. Using gross income, what is her debt service ratio?

The debt service ratio is total EMIs divided by gross monthly income. Her EMIs total ₹30,000 against gross income of ₹1,00,000, giving 30%. Using take-home income of ₹85,000 would wrongly give about 35.3%.

  1. A30%Correct
  2. B35.3%
  3. C15%
  4. D20%

Explanation

Total EMIs = 12,000 + 18,000 = ₹30,000. Debt service ratio on gross income = 30,000/1,00,000 = 30%. Using take-home pay would give 35.3%, which is the wrong base here. Counting only the home loan gives 18%, and 15% is not derived from the data.

Did you get it right without looking?

One question tells you little. A timed set on Evaluating the Financial Position of Clients shows your real accuracy, how long you take and where you lose marks.

Practise Evaluating the Financial Position of ClientsFree diagnostic mock

More Evaluating the Financial Position of Clients questions