1. What is the primary purpose of a Home Information Pack (HIP) in mortgage advisory?
A. To provide a loan repayment schedule
B. To guarantee mortgage approval
C. To provide key property information to potential buyers
D. To calculate property tax
Home Information Packs are designed to provide potential buyers with essential information about a property, helping them make informed decisions.
2. Which of the following documents is usually included in a Home Information Pack?
A. Title deeds of the property
B. Bank statements of the owner
C. Personal loan history of the buyer
D. Vendor invoices
Title deeds are essential in a HIP to confirm ownership and legal status of the property for potential buyers.
3. Who is primarily responsible for preparing the Home Information Pack?
A. Mortgage regulator
B. Bank branch manager
C. Prospective buyer
D. Seller or property owner
The seller or property owner is responsible for preparing the Home Information Pack, ensuring all relevant property information is included.
4. Which of these benefits is offered to buyers by a Home Information Pack?
A. Automatic loan approval
B. Transparency about property details
C. Discount on mortgage rates
D. Legal representation in court
HIPs provide transparency by detailing the legal, structural, and financial aspects of the property, helping buyers make informed decisions.
5. Which regulatory guideline supports the requirement of Home Information Packs for property sales?
A. Consumer protection and property sale regulations
B. Basel III capital adequacy norms
C. Income tax return filing regulations
D. Foreign exchange management act
HIPs are part of property sale regulations aimed at protecting buyers by providing key property information before purchase.
6. If ₹10,000 is invested for 3 years at an annual interest rate of 8% compounded annually, what is the future value?
A. ₹12,000
B. ₹12,598.40
C. ₹13,000
D. ₹11,500
Future Value = 10,000 × (1 + 0.08)^3 = ₹12,598.40.
7. What is the present value of ₹5,000 to be received after 4 years at 10% annual discount rate?
A. ₹3,200
B. ₹4,000
C. ₹3,415
D. ₹2,900
Present Value = 5,000 / (1 + 0.10)^4 ≈ ₹3,415.
8. Which of the following is true for an ordinary annuity?
A. Payments are made at the end of each period
B. Payments are made at the beginning of each period
C. Compounding does not affect the annuity
D. Future value cannot be calculated
In an ordinary annuity, payments are made at the end of each period, which affects the calculation of present and future values.
9. What is the future value of an annuity of ₹1,000 paid annually for 5 years at 8% interest?
A. ₹5,000
B. ₹5,400
C. ₹4,665
D. ₹5,866.50
Future Value of Annuity = 1,000 × [(1 + 0.08)^5 – 1] / 0.08 ≈ ₹5,866.50
10. Which factor increases the future value of an investment?
A. Lower interest rate
B. Longer investment period
C. Early withdrawal
D. Reduced principal amount
A longer investment period allows interest to compound over time, increasing the future value of the investment.
11. Capital gains arise from which of the following transactions?
A. Regular salary income
B. Fixed deposit interest
C. Sale of capital assets like property or shares
D. Rental income from property
Capital gains are profits earned from the sale of capital assets such as property, stocks, or bonds, not from regular income sources.
12. What is the difference between short-term and long-term capital gains?
A. Short-term gains are tax-free
B. Based on the holding period of the asset
C. Long-term gains are always lower than short-term gains
D. Only long-term gains are considered capital gains
Capital gains are classified as short-term or long-term based on the holding period of the asset, which affects taxation.
13. Which of the following assets qualifies for long-term capital gains under Indian tax laws?
A. Equity shares held for more than 12 months
B. Savings account deposits
C. Gold jewelry held for less than 1 year
D. Salary income
Equity shares held for more than 12 months qualify for long-term capital gains, attracting different tax rates compared to short-term gains.
14. Which method is used to calculate capital gains on the sale of an asset?
A. Annualization of income
B. Depreciation method
C. FIFO method
D. Sale price minus cost of acquisition (and indexed cost for long-term)
Capital gains = Sale price – Cost of acquisition. For long-term assets, indexed cost is used to adjust for inflation.
15. Which of the following is a tax exemption available for long-term capital gains?
A. Gains from short-term mutual funds
B. Investment in specified bonds under Section 54EC
C. Dividend income from stocks
D. Fixed deposit interest
Under Section 54EC, long-term capital gains can be exempted if invested in specified bonds within the prescribed time period.
16. What is the primary purpose of a loan amortization schedule?
A. To calculate the total interest the bank earns annually
B. To predict future stock market returns
C. To detail each loan installment showing principal and interest components
D. To track customer credit score
A loan amortization schedule breaks down each EMI into principal and interest components, helping borrowers and banks track repayment.
17. Which formula is used to calculate the EMI for a fixed-rate loan?
A. EMI = Principal ÷ Number of months
B. EMI = [P × r × (1+r)^n] / [(1+r)^n – 1]
C. EMI = Principal × Interest rate
D. EMI = Total interest ÷ Number of months
EMI for a fixed-rate loan is calculated using the standard formula: EMI = [P × r × (1+r)^n] / [(1+r)^n – 1], where P = principal, r = monthly interest rate, n = number of installments.
18. In an amortization schedule, what happens to the principal and interest components over time?
A. Interest increases, principal decreases
B. Both remain constant
C. Principal decreases, interest remains constant
D. Principal portion increases, interest portion decreases
In a typical loan amortization schedule, as time progresses, the interest portion of EMI decreases while the principal portion increases.
19. Which input is NOT required to compute a loan amortization schedule?
A. Borrower’s occupation
B. Loan amount (principal)
C. Interest rate
D. Loan tenure
Borrower’s occupation is irrelevant for calculating the amortization schedule, which depends only on principal, interest rate, and tenure.
20. Which of the following is a benefit of using a loan calculator for customers?
A. Automatically approves the loan
B. Helps estimate monthly EMIs and plan finances
C. Reduces the interest rate
D. Tracks property market trends
Loan calculators help borrowers estimate EMIs based on principal, rate, and tenure, allowing better financial planning.
21. What happens to the loan outstanding if a borrower makes a prepayment?
A. EMI amount increases automatically
B. Interest rate changes
C. Principal outstanding reduces, lowering future interest
D. Loan tenure extends automatically
Prepayment reduces the outstanding principal, which in turn reduces the interest component of future EMIs.
22. Loan foreclosure refers to:
A. Delay in EMI payments
B. Repaying the entire loan before tenure ends
C. Partial prepayment of loan
D. Switching to floating rate
Foreclosure is the process of paying off the entire loan before the scheduled end of tenure, often attracting prepayment charges.
23. Which type of mortgage loan offers a fixed interest rate for the entire tenure?
A. Floating rate loan
B. Overdraft loan
C. Revolving credit loan
D. Fixed rate loan
A fixed rate loan maintains the same interest rate throughout the tenure, providing predictable EMIs for the borrower.
24. Floating rate loans are linked to:
A. Benchmark interest rates like MCLR or Repo Rate
B. Fixed percentage of principal only
C. Inflation index of the country
D. Borrower’s credit score
Floating rate loans are tied to benchmark rates such as MCLR or RBI’s repo rate; EMIs vary when the benchmark changes.
25. Which of the following is a key risk a bank assesses before granting a mortgage loan?
A. Market risk of shares owned by the borrower
B. Creditworthiness and repayment capacity of the borrower
C. Loan officer’s personal opinion
D. Borrower’s social media activity
Banks primarily assess borrower’s creditworthiness, income, and repayment capacity to mitigate default risk.
