Revision questions with answers
Grade 12
National Finance Olympiad
Intra-school level
1. How do central banks battle inflation?:
a) By increasing interest rates
b) By increasing money supply
c) By decreasing unemployment
d) By decreasing interest rates
Answer: a
Category: Inflation & Deflation
2. What is the purpose of the Know Your Customer (KYC) guidelines in the Indian banking system?
a) Regulating interest rates on loans
b) Preventing money laundering and identity theft
c) Facilitating cross-border transactions
d) Determining the eligibility for government schemes
Answer: b
Category: Banking
3. The process of converting future cash flows into their present value equivalent is called:
a) Compounding
b) Discounting
c) Amortization
d) Accumulation
Answer: b
Category: Investment
4. Which of the following income sources is exempt from income tax in India?
a) Income from agricultural activities
b) Income from house property
c) Income from salary
d) Income from capital gains
Answer: a
Category: Tax Planning
5. Which of the following is an example of revolving credit?
a) Personal loan
b) Mortgage loan
c) Credit card
d) Auto loan
Answer: c
Category: Loans & Credits
6. What is the primary purpose of budgeting?
a) Maximising expenses
b) Minimising income
c) Tracking financial goals
d) Controlling spending
Answer: c, d
Category: Financial Planning
1
National Finance Olympiad
7. Which of the following is a recommended strategy for building an emergency fund?
a) Investing in high-risk stocks
b) Contributing to a retirement account
c) Using credit cards for emergencies
d) Automating regular savings transfers
Answer: d
Category: Financial Planning
8. Which of the following is a cause of demand-pull inflation?
a) Decreased government spending
b) Increased unemployment
c) Increased consumer spending
d) Reduced money supply
Answer: c
Category: Inflation & Deflation
9. What are some of the sources of revenue for Banks?
a) Net interest rate spread
b) Maintenance fees
c) ATM Fees
d) Trading in the stock market
Answer: a, b, c
Category: Banking
10. Venture capital is an example of an alternative investment vehicle that focuses on:
a) Investing in established companies with stable cash flows
b) Investing in publicly traded stocks and bonds
c) Providing early-stage funding to startups with high growth potential
d) Investing in government-issued securities
Answer: c
Category: Investment
11. Which of the following financial transactions is Income Tax not levied on?
a) Sale of stocks and mutual funds
b) Purchase of a new apartment
c) Salary
d) Rent received from tenant
Answer: b
Category: Tax Planning
12. What does the term “subprime loan” refer to?
a) A loan with a low interest rate
b) A loan offered by a non-traditional lender
c) A loan granted to borrowers with a low credit score
d) A loan that requires a nominal down payment
Answer: c
Category: Loans & Credits
2
National Finance Olympiad
13. Which of the following is an example of secured debt?
a) Credit card debt
b) Student loan debt
c) Mortgage debt
d) Personal loan debt
Answer: c
Category: Financial Planning
14. Which of the following actions is an example of a “don’t” when it comes to personal finance?
a) Saving a portion of your income for emergencies.
b) Paying only minimum dues on credit card bills
c) Constructing a diversified investment portfolio.
d) Creating a budget and tracking your expenses.
Answer: b
Category: Financial Planning
15. Which of the following is an effect of inflation?
a) Decreased borrowing costs
b) Increased purchasing power
c) Reduced real income
d) Stimulated economic growth
Answer: c
Category: Inflation & Deflation
16. If an amount of Rs. 10,000 is invested at an annual interest rate of 5% compounded semi-annually, what
will be the total amount after 2 years?
a) 11,038.13
b) 11,000
c) 10,505.56
d) 11,250.23
Answer: a
Category: Banking
17. Which of the following statements is true regarding dividend payments on equity shares in India?
a) Dividends are guaranteed and paid to shareholders every quarter.
b) Dividends are optional and may or may not be paid by a company.
c) Dividends are paid only to large institutional investors and not individual shareholders.
d) Dividends are fixed and determined by the Reserve Bank of India (RBI).
Answer: b
Category: Investment
18. Which authority is responsible for administering and collecting income tax in India?
a) Ministry of Finance
b) Reserve Bank of India (RBI)
c) Central Board of Direct Taxes (CBDT)
d) Securities and Exchange Board of India (SEBI)
Answer: c
Category:Tax Planning
3
National Finance Olympiad
19. Identify the organization that does not evaluate credit scores.
a) Experian
b) CIBIL
c) Fi money
d) Jupiter Money
Answer: c, d
Category: Loans & Credits
20. Pankti is 25 years old and she is trying to figure out how much of her savings she should invest in less risky
assets like bonds. Use the commonly accepted age rule to calculate the percentage of savings she should
invest in bonds.
a) 75%
b) 50%
c) 25%
d) 30%
Answer: c
Category: Financial Planning
21. Which insurance policy combines investment and insurance components, allowing policyholders to build
cash value over time?
a) Term life insurance
b) Health insurance
c) Unit Linked Insurance Plan
d) Renters insurance
Answer: c
Category: Financial Planning
22. In India, the term “core inflation” refers to:
a) Inflation excluding food and fuel prices
b) Inflation in rural areas
c) Inflation measured by the WPI
d) Inflation caused by government spending
Answer: c
Category: Inflation & Deflation
23. Deflation can be a result of:
a) Decreased money supply
b) Increased government borrowing
c) Expansionary monetary policy
d) Increased aggregate demand
Answer: a
Category: Inflation & Deflation
24. The Indian Banking Ombudsman Scheme provides a mechanism for resolving complaints related to
banking services. Which organization administers this scheme?
a) Reserve Bank of India (RBI)
b) Securities and Exchange Board of India (SEBI)
c) National Stock Exchange (NSE)
d) Ministry of Finance
Answer: a
Category: Banking
4
National Finance Olympiad
25. What are the factors involved in determining the interest rate on a loan?
a) Credit score
b) Gender
c) Repayment History
d) College you graduated from
Answer: a, c
Category: Banking
26. What does the term “market capitalization” refer to in the context of equity investments in India?
a) The total value of all outstanding shares of a company
b) The price at which an equity share is traded in the market
c) The annual dividend paid by a company to its shareholders
d) The book value of a company’s equity
Answer: a
Category: Investment
27. Which of the following represents a bond?
a) Ownership stake in a company
b) Share of stock in a corporation
c) Certificate of deposit (CD) issued by a bank
d) Debt instrument issued by a corporation or government
Answer: d
Category: Investment
28. Which of the following items is exempted from GST in India?
a) Pens
b) Essential commodities like rice and wheat
c) Imported goods and services
d) Services provided by professionals like doctors and lawyers
Answer: b
Category:Tax Planning
29. Which body is responsible for the decision-making process regarding changes in GST rates in India?
a) Central Board of Direct Taxes (CBDT)
b) Reserve Bank of India (RBI)
c) Goods and Services Tax Council
d) Ministry of Finance
Answer: c
Category: Tax Planning
30. How does defaulting on a loan affect your relationship with the lender?
a) It improves trust and future loan opportunities.
b) It has no impact on the relationship with the lender.
c) It may strain the relationship and make future borrowing more difficult.
d) It guarantees loan forgiveness and no further consequences.
Answer: c
Category: Loans & Credits
5
National Finance Olympiad
31. What is the purpose of a credit report?
a) To determine a borrower’s bank balance
b) To calculate the life expectancy of the person
c) To evaluate a borrower’s creditworthiness
d) To track the borrower’s spending habits
Answer: c
Category: Loans & Credits
32. Which of the following is a “don’t” when it comes to personal finance in financial planning?
a) Investing in low-cost index funds
b) Paying off high-interest debt first
c) Not having a comprehensive insurance coverage
d) Saving for retirement early
Answer: c
Category: Financial Planning
33. If your monthly income is ₹50,000, how much should you allocate towards wants based on the commonly
accepted 50-30-20 rule?
a) ₹25,000
b) ₹15,000
c) ₹10,000
d) ₹5,000
Answer: b
Category: Financial Planning
34. As per the commonly accepted 10-5-3 rule, how much would you expect as return from stocks and money
market funds?
a) 10% from stocks and 2% from money market funds
b) 5% from money market funds and 10% from stocks
c) 3% from money market funds and 10% from stocks
d) 10% from stocks and 7% from money market funds
Answer: c
Category: Financial Planning
35. A company purchases a piece of machinery for ₹1,25,500. The estimated useful life of the machinery is 8
years, with ₹5,500 salvage value. The company uses the straight-line depreciation method. Calculate the
depreciation expense for the eighth year.
a) ₹15,000
b) ₹45,000
c) ₹15,687.5
d) ₹0
Answer: a
Category: Inflation & Deflation
36. With an inflation rate of 6 percent, prices would double in about how many years?
a) 4
b) 12
c) 9
d) 10
Answer: b
Category: Inflation & Deflation
6
National Finance Olympiad
37. Hyperinflation is characterized by:
a) Rapid and out-of-control inflation
b) Gradual rise in prices
c) Deflationary pressures
d) A moderate increase in prices
Answer: a
Category: Inflation & Deflation
38. Shiv invested a sum of money at compound interest. It amounted to Rs 3,419 in 2 years and Rs 4,107 in 3
years. Find the rate percent per annum.
a) 20.12%
b) 21.12%
c) 15%
d) 25%
Answer: a
Category: Banking
39. Which of the following factors can affect the price of equity shares in the Indian stock market?
a) Economic conditions and market sentiment
b) Corporate earnings and financial performance
c) Government policies and regulations
d) All of the above
Answer: d
Category: Investment
40. Calculate the approximate time for investment to quadruple in value if the rate of return is 15%
a) 9 years
b) 9 months
c) 9.6 years
d) 10 years
Answer: c
Category: Investment
41. Deep aims to double the value of his investment in 5 years. How much return does he need to generate to
do so?
a) 14.4%
b) 16%
c) 20%
d) 10.5%
Answer: a
Category: Investment
42. What are the minimum and maximum amounts that can be invested in PPF every year?
a) no minimum amount and 1.5 lakhs
b) 500 and no maximum amount
c) 500 and 1.5 lakhs
d) 500 and 1 lakh
Answer: c
Category: Tax Planning
7
National Finance Olympiad
43. What tax rate is applicable on the interest earned on a PPF investment?
a) 10%
b) 15%
c) 5%
d) Tax-free
Answer: d
Category: Tax Planning
44. Raj took a personal loan worth ₹1,00,000 for 1 year at an interest rate of 5%. The EMI he pays is
8,560.75 per month. Calculate the interest he will end up paying.
a) ₹2,729
b) ₹5,000
c) ₹3,140.23
d) ₹4,144
Answer: a
Category: Loans & Credits
45. Kavya took a car loan worth ₹7,00,000 for 5 years at an interest rate of 6.5%. The EMI she pays is
₹13,696.30 per month. Calculate the interest that she pays in the first instalment.
a) ₹3,791.67
b) ₹45,500
c) 45,000
d) ₹3,900.42
Answer: a
Category: Loans & Credits
46. Which of the following is an advantage of debt refinancing?
a) Lowering monthly payments
b) Increasing the total interest paid over time
c) Incurring prepayment penalties
d) Obtaining a higher interest rate
Answer: a
Category: Financial Planning
47. When calculating the emergency fund size, which factor is typically NOT considered?
a) Monthly expenses
b) Number of dependents
c) Job security
d) Investment returns
Answer: d
Category: Financial Planning
48. Which type of insurance provides coverage for a specified period and pays a death benefit if the
insured passes away during that period?
a) Term insurance
b) Health insurance
c) Fire insurance
d) General insurance
Answer: a
Category: Financial Planning
8
National Finance Olympiad
49. What happens to the interest portion of the monthly payment as a loan is amortised?
a) It remains constant throughout the loan term.
b) It increases over time.
c) It decreases over time.
d) It is not affected by the loan amortisation.
Answer: c
Category: Loans & Credits
50. What is the maximum deduction you can claim under Section 80C?
a) ₹1,50,000
b) ₹1,00,000
c) ₹75,000
d) ₹2,00,000
Answer: a
Category: Tax Planning
