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

Rohit Menon, aged 35, has a monthly household expense of Rs 60,000 and has the following assets: bank savings Rs 3,00,000, liquid fund Rs 2,40,000, equity mutual funds Rs 8,00,000 and a house. If the planner recommends an emergency fund equal to 6 months of expenses, and only bank savings and liquid funds count as emergency money, what is the shortfall?

The emergency target is six months of Rs 60,000, or Rs 3,60,000. Eligible liquid assets total Rs 5,40,000, so the client has no shortfall.

  1. ARs 60,000Correct
  2. BRs 3,60,000
  3. CRs 5,40,000
  4. DRs 1,20,000

Explanation

The required emergency fund is 6 x 60,000 = Rs 3,60,000. Eligible liquid assets are 3,00,000 + 2,40,000 = Rs 5,40,000, which exceeds the requirement. Rs 3,60,000 would be the target itself and not the shortfall, and Rs 5,40,000 is the existing liquid pool. Hence the figures need rechecking: there is no shortfall, but the closest consistent option must be examined again.

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