Practice Questions
Concept Explanation
When interest is compounded quarterly, the annual rate is divided by 4 and periods equal 4T.
Key Formula
A = P(1 + R/400)^(4T)
- Rate per quarter = R/4
- Number of periods = 4T
Example
P = Rs. 10,000, R = 8%, T = 1 year. A = 10000 × (1.02)^4 = Rs. 10,824.32.
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Q1 EasyFor quarterly compounding at 16% p.a., the rate per quarter is:ExplanationQuarterly rate = R/4 = 16/4 = 4% per quarter. Answer: C.
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Q2 EasyHow many compounding periods are there in 1 year if interest is compounded quarterly?ExplanationQuarterly compounding means 4 periods in one year. Answer: C.
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Q3 MediumCI quarterly: Rs. 10,000 at 16% p.a. for 1 year (4% per quarter). The compound interest is:ExplanationA = 10000 × (1.04)^4 = 10000 × 1.16985856 = Rs. 11,698.5856. CI = 11698.5856 − 10000 = Rs. 1,698.56 (approx.). Answer: B.
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Q4 MediumThe compound interest on Rs. 10,000 at 8% per annum for 1 year compounded quarterly is approximately:ExplanationRate per quarter = 2%; periods = 4. A = 10000 × (1.02)^4 = Rs. 10,824.32. CI = 10824.32 − 10000 = Rs. 824.32. Answer: B.
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Q5 MediumAmount on Rs. 16,000 at 12% p.a. for 1 year compounded quarterly is approximately:ExplanationRate per quarter = 3%. A = 16000 × (1.03)^4 = 16000 × 1.12550881 ≈ Rs. 18,012. Answer: B.
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Q6 MediumAmount on Rs. 8,000 at 8% for 1 year compounded quarterly is approximately:ExplanationA = 8000 × (1.02)^4 = 8000 × 1.08243216 ≈ Rs. 8,659.46 ≈ Rs. 8,659. Answer: B.
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Q7 MediumAmount on Rs. 5,000 at 12% for 6 months compounded quarterly is:ExplanationRate per quarter = 3%; periods in 6 months = 2. A = 5000 × (1.03)^2 = 5000 × 1.0609 = Rs. 5,304.50. Answer: B.
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Q8 MediumAmount on Rs. 24,000 at 8% for 1 year compounded quarterly is approximately:ExplanationA = 24000 × (1.02)^4 = 24000 × 1.08243216 ≈ Rs. 25,978.37 ≈ Rs. 25,978. Answer: B.
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Q9 HardFind the compound interest on Rs. 16,000 at 20% per annum for 9 months compounded quarterly.ExplanationQuarterly rate = 20/4 = 5%. Number of quarters in 9 months = 3. A = 16000 × (1.05)^3 = 16000 × 1.157625 = Rs. 18,522. CI = 18522 − 16000 = Rs. 2,522. Answer: B.
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Q10 HardFind the compound interest on Rs. 8,000 at 20% per annum for 9 months, compounded quarterly.ExplanationRate per quarter = 5%; periods = 3. A = 8000 × (1.05)^3 = 8000 × 1.157625 = Rs. 9,261. CI = 9261 − 8000 = Rs. 1,261. Answer: B.
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Q11 HardCI on Rs. 20,000 at 10% for 1 year compounded quarterly is approximately:ExplanationRate per quarter = 2.5%. A = 20000 × (1.025)^4 ≈ Rs. 22,076.26. CI ≈ Rs. 2,076.26. Answer: C.
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Q12 HardCI on Rs. 12,000 at 16% p.a. for 1 year compounded quarterly is approximately:ExplanationA = 12000 × (1.04)^4 ≈ 12000 × 1.16985856 ≈ Rs. 14,038.30. CI ≈ Rs. 2,038.30. Answer: C.
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Q13 HardAmount on Rs. 15,000 at 8% for 9 months compounded quarterly is approximately:ExplanationRate per quarter = 2%; periods = 3. A = 15000 × (1.02)^3 = 15000 × 1.061208 = Rs. 15,918.12 ≈ Rs. 15,912 if using rounded intermediate values commonly listed as Rs. 15,912. Exact: 15000 × 1.061208 = Rs. 15,918.12. Recheck Indiabix-style option: using (1.02)^3 = 1.061208 → Rs. 15,918. Prefer exact. Correct amount = Rs. 15,918.12. Adjusting option to match exact calc.
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Q14 HardCI on Rs. 4,000 at 20% p.a. for 9 months compounded quarterly is:ExplanationWait: 4000 × (1.05)^3 − 4000 = 4000 × 1.157625 − 4000 = 4630.5 − 4000 = Rs. 630.50. Answer: B.
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DS1 Easy
How many compounding periods are there in 9 months?
Statement IInterest is compounded quarterly.
Statement IITime period under consideration is 9 months.
ExplanationTogether: periods = 9/3 = 3 quarters. Both needed. Answer: C. -
DS2 Medium
What is the compound interest for 1 year?
Statement IPrincipal is Rs. 10,000 at 16% p.a.
Statement IIInterest is compounded quarterly.
ExplanationTogether: CI = 10000 × (1.04)^4 − 10000 = Rs. 1,698.56. Both needed. Answer: C.
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DS3 Medium
Is quarterly CI greater than annual CI for 1 year?
Statement IP = Rs. 10,000, R = 8%, T = 1 year, compounded quarterly.
Statement IIAnnual compounding at the same P, R, T gives amount Rs. 10,800.
ExplanationStatement I: quarterly amount ≈ Rs. 10,824.32 > annual Rs. 10,800, so yes. Statement II alone does not give the quarterly amount. Answer: A. -
DS4 Hard
What is the compound interest for 9 months?
Statement IP = Rs. 16,000 at 20% p.a. compounded quarterly.
Statement IIThere are 3 quarterly periods in 9 months at 5% per quarter.
ExplanationStatement I alone: CI = 16000 × (1.05)^3 − 16000 = Rs. 2,522. Statement II alone lacks principal. Answer: A.