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ABM-Case Studies DAILY QUIZ - CAIIB - 12-03-2019 Bank Promotion exams

ABM-Recollected Only for Bankers
ABM-Last Minute You will be receiving Rs. 204000 at the end of each year for the next 20 years. If the RBI
BFM-Case Studies
current discount rate for such a stream of cash is 10%, find the present value of cash IIBF
flow.
BFM-Recollected IRDA
BFM-Last Minute a. 1736767 SEBI
Important Circulars b. 1737667 BCSBI
Master Circulars c. 1738767 CIBIL
Bank DA Rates
d. 1736767 Banking and Insurance
Bank Holidays Ministry of Finance
Ans - d
Life Ins Companies Excise & Customs
List of PSBs Explanation : Income Tax Department
List of Private Banks NSE
Here,
List of Foreign Banks BSE

Since 204000 is like EMI. So, to find P, we use the formula of EMI

EMI = P * R * [(1+R)^T/(1+R)^T-1)]

204000 = P × 0.1 × 1.1^20 ÷ (1.120 – 1)

204000 = P × 0.1174596
P = 1736767
.............................................

Given,
X = 10, 20,30,40,50 AdSense has
Total Inputs (N) = (10,20,30,40,50) paid more than
Total Inputs (N) =5
Find Standard Error
$11 billion to
publishers
a. 7.0017
b. 7.0711
c. 7.7011
d. 7.7701

Ans - b

Solution:

METRO WOMEN Standard Error Formula

BLACK SYNTHETIC SEx̄ = SD/ √(N)
where
SEx̄ = Standard Error of the Mean
Rs. 1,490.00 SD = Standard Deviation of the Mean
(details + delivery)
N = Number of Observations of the Sample

To find Mean:
Mean (xm) = (x1+x2+x3...xn)/N
Mean (xm) = 150/5
Mean (xm) = 30

To find SD:
Use Table or it can be done by using this Standard Deviation Calculator
SD = √(1/(N-1)*((x1-xm)^2+(x2-xm)^2+..+(xn-xm)^2))
= √(1/(5-1)((10-30)^2+(20-30)^2+(30-30)^2+(40-30)^2+(50-30)^2))
= √(1/4((-20)^2+(-10)^2+(0)^2+(10)^2+(20)^2))
= √(1/4((400)+(100)+(0)+(100)+(400)))

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= √(250)
= 15.811

To Find Standard Error:

Standard Error=SD/√(N)
Standard Error=15.811388300841896/√(5)
Standard Error=15.8114/2.2361
Standard Error=7.0711
.............................................

A 12%, 4-year bond of Rs. 100 was purchased by x for Rs. 100. If the market interest
rate increased by 1%, what will the market price?

a. 93.07
b. 90.37
c. 97.03
d. 79.30

Ans - c

Explanation :

P = 100
CR = 12%
YTM = 12 + 1 = 13%
So, Price = 97.03
.............................................

A random sample of 100 scores of students applying to Delhi University x = 21.2 with a
sample deviation of 4.46. Find a 90% confidence interval for the true of score µ of all
applicants.

a. 19.466, 20.934
b. 19.466, 21.934
c. 20.466, 20.934
d. 20.466, 21.934

Ans - d

Explanation :

Solution. Here the appropriate z–score is 1.645

thus, µ = x ± (zr × S / √n)
21.2 ± (1.645 × 4.46 / √100)
21.2 ± 0.734 . Therefore we can say with “90% confidence” that
20.466 ≤ µ ≤ 21.934

.............................................

Find Coefficient of Variance of {13,35,56,35,77}

a. 0.5614
b. 0.6514
c. 1.5614
d. 1.6514

Ans - a

Solution:
Number of terms (N) = 5
Mean:
Xbar = (13+35+56+35+77)/5
= 216/5 = 43.2

Standard Deviation (SD):

σ= √(1/(N - 1)*((x1-xm)^2+(x2-xm)^2+..+(xn-xm)^2))
= √(1/(5-1)((13-43.2)^2+(35-43.2)^2+(56-43.2)^2+(35-43.2)^2+(77-43.2)^2))
= √(1/4((-30.2)^2+(-8.2)^2+(12.9)^2+(-8.2)^2+(33.8)^2))
= √(1/4((912.04)+(67.24)+(163.84)+(67.24)+(1142.44)))
= √(588.2)
σ= 24.2528

Coefficient of variation (CV) = Standard Deviation / Mean

= 24.2528/43.2
= 0.5614
.............................................

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An urn contains 10 black balls and 5 white balls. 2 balls are drawn from the urn one
after other without replacement. What is the probability that both drawn are black ?

a. 2/7
b. 3/7
c. 4/7
d. 6/7

Ans - b

Solution :

Let E and F denote respective events that first and second ball drawn are black.

We have to find here P(E n F ) and P(E/F)

Now P(E) = P(Black in first drawn) = 10/15

Also given that the first ball is drawn i.e events E has occurred. Now there are 9 black
balls and 5 white balls left in the urn. Therefore the probability that the second ball
drawn is black, given that the ball first drawn is black nothing but conditional probability
of F given that E has occurred already.

Hence P(E/F) = 9/14

Now by the multiplication rule of probability

P(E n F) = P(E) × P(E/F)

= 10/15 × 9/14 = 3/7
........................................................

The claims manager at an insurance company is conducting risk analysis on the firm's
automobile policies. The data on 198 policies yielded the following sums of squares on
the number of miles driven per year and the number of traffic events (accidents and
tickets) per year. The sum of squares for miles driven per year is 217,300. The sum of
squares for the traffic events per year is 114. The sum of squares for miles driven times
traffic events is 660.

1. What is the correlation between Number of Miles Driven and Number of Traffic
Events?

a. -0.133
b. 0.133
c. 0.319
d. 0.033

Ans - b

Solution:

Corr(Miles Driven, Traffic Events) = 660 / (√217,300 * √114 = 0.132606

.............................................

2. What is the standard deviation of the correlation?

a. -0.071
b. 0.266
c. 0.046
d. 0.071

Ans - d

Solution:

S.D.(r) = √[(1 - (0.1326062)) / (198 - 2)] = 0.070798

.............................................

3. What is the 95% confidence interval for the population correlation?

a. [0.271, -0.006]
b. [-0.006, 0.271]
c. [-0.006, -0.271]
d. [0.006, 0.271]

Ans - b

Solution:

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ρ = 0.132606 ± 1.96 * 0.070798 => ρ = 0.132606 ± 0.138764. ρ ∈ [-0.0062, 0.2714]
.............................................

4. What is the Z-score for the population correlation for a test of H0: ρ = 0?

a. 0.19
b. 2.78
c. 1.87
d. -1.87

Ans - c

Solution:

Z-score = (0.132606 - 0) / 0.070798 = 1.873

.............................................

5. What is the decision and conclusion for the test of H0: ρ = 0 in 19) with a 5% level of
significance?

a. Do Not Reject H0. The number of miles driven and the number of traffic events do
not have a direct linear relationship
b. Do Not Reject H0. The number of miles driven and the number of traffic events do
not have an inverse linear relationship
c. Do Not Reject H0. The number of miles driven and the number of traffic events do
not have a direct non-linear relationship
d. Reject H0. The number of miles driven and the number of traffic events have a direct
linear relationship

Ans - a

Solution:

The critical Z-value for a 5% level of significance is ±1.96. The calculated Z-score of
1.873 falls into the non-rejection region because it is less than 1.96. The decision is to
not reject H0: ρ = 0. There is not sufficient evidence to conclude that the correlation
coefficient is significantly different from 0.0. The number of miles driven and the
number of traffic events do not have a direct linear relationship.
.............................................

An annuity consists of monthly repayments of Rs. 600 made over 20 years and if rate is
14% monthly. What is the present value of the annuity?

a. 48872
b. 42878
c. 48728
d. 48278

Ans - d

Explanation :

Apply FV formula to get the Answer

Here
R = 14% / 12 = 0.01166
T = 20 × 12 = 240
PV = FV ÷ (1+r)t = 48278
.............................................

A sum of Rs. 32800 is borrowed to be paid back in 2 years by two equal annual
installments allowing 5% compound interest. Find the annual payment.

a. 16470
b. 16740
c. 17460
d. 17640

Ans - d

Explanation :

Here,

PV =?
P = Rs. 32800
T = 2 years
R = 5% = 0.05
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PV = P / R * [(1+R)^T - 1]/(1+R)^T

32800 = P × (1.052 – 1) ÷ (0.05 × 1.052)

P = 32800 ÷ 1.8594
P = 17640
.............................................

X wants to borrow Rs. 25000 immediately and another Rs. 20000 after a period of 2
years @ 10% roi. He wants to pay it in monthly installments for 5 years. Calculate the
amount of monthly payment.

a. 978
b. 987
c. 897
d. 879

Ans - d

Explanation :

Here,

First find PV of 20000 for 2 years @ 10%.

Here, t = 2*12 = 24 months and r = 10% ÷ 12 = 0.00833

PV = P / (1+R)^T

So,
PV = 20000 ÷ (1+0.0083)^24
= 16388.07
So, total amount = 25000 + 16388.07 = 41388.07

Now,
P = 41388.07,
R = 10% ÷ 12 = 0.00833,
T = 5 * 12 = 60 months

EMI = P * R * [(1+R)^T/(1+R)^T-1)]

EMI = (41388.07 * 0.00833) * {(1.0083)^60 ÷ (1.0083)^60 – 1)}

= 879
.............................................

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