MGT411 Practice Questions Solution Lectures 1-22

MGT411 · Solution of Practice Questions · Lessons (1-22)

Q1. How many numbers of prices can be there for 60 commodities under barter system?

Prices = n (n-1)/2 N= numbers of commodities Prices =60(60-1)/2 Prices = 60*29.5 Prices =1770

Q2. Ahmad wants to start his new business 12 years later with Rs. 3,00,000. For this purpose, how much funds he should save and invest today if he gets 5.3% on his funds?

PV= FV / (1+i) n PV= 300,000/(1.053)12 PV= 300,000/1.858 PV= 161463.93

Q3. Suppose you have invested an amount of Rs. 75,000 at 14% interest rate. In how much time this amount will turn to 150,000?

T = 72/ I t = 72/ 14 t = 5.14 years

Q4. If you have Rs. 50,000 and invest it at 8.5% rate of interest then how much will you get after 5 years?

FV = PV x (1+i)n FV = 50,000 x (1+0.085)5 FV = 50,000 x 1.504 FV = 75,182.83

Q5. What will be the yield to maturity (YTM) of 1 year 5% coupon bond having face value $100 and currently selling at $ 90?

Price ={ Coupon payment /(1+YTM)1 } + {Face value/ (1+YTM)1}

90 = { 5 /(1+YTM)1 } + {100/(1+YTM)1 }

1+YTM = 105/90

1+YTM = 1.166

YTM = 1.166 – 1 = 16.7 %

6. You are required to calculate current yield of 6% coupon bond that you have purchased at Rs.107 with face value of Rs. 100.

Current Yield = Yearly Coupon Payment/ Price Paid

Current Yield = 6/107

Current Yield = 5.61%

7. Use Fisher equation to calculate real interest rate if inflation is 6% and nominal interest rate is 12%.

Fisher equation is:

r = i – π

Real interest rate = nominal interest rate – inflation

Real interest rate = 12-6 = 6%

8. Calculate CPI index for the years 2020, 2021 and 2022 with the given data.

Years · CPI index · 2020 · Rs. 1,000 · 2021 · Rs. 1,500 · 2022 · Rs. 2,000

CPI = (cost of basket in that period / cost of basket in Base period)*100

Years CPI index

2020 1000

2021 1500

2022 2000

9. Calculate inflation rate for the years 2020, 2021 and 2022 with the given data.

Years · CPI index · 2019 · Rs. 800 · 2020 · Rs. 1,000 · 2021 · Rs. 1,500 · 2022 · Rs. 2,000

CPI = (cost of basket in that period / cost of basket in Base period)*100

period}*100

Years

CPI index

2019 Rs. 800 2020 Rs. 1,000 25%

2021 Rs. 1,500 187.5 50%

2022 Rs. 2,000 33.33%