Quiz Space

Corporate Finance · End Term · 10 May 2026 · January 2026 term · Set 1

Question 30: An employee contributes 100 rupees per year to a retirem…

Question 30

+4 marksNumerical answer

An employee contributes 100 rupees per year to a retirement account with 5% average annual returns. She starts contributing after age 25 and continues until retirement at 60 (a total of 35 years of contributions). How much would the employee have in her retirement account at the age of 60 (in rupees)? (Round off to the nearest integer)

Show answer

Correct answer: 9000 (accepted within ±500)

See the whole paperTake it as a mock test

Question 30 of 35 in the IIT Madras BS Corporate Finance (Corporate Finance) End Term paper sat on 10 May 2026, in the January 2026 term (Corporate Finance 06 May 26). It carries 4 marks.

More questions from this paper

  1. Q1If the nominal interest rate is 15.5% and the expected inflation rate is 10.2%, the real interest rate is 27.3%.
  2. Q2An upward-sloping yield curve indicates that long-term interest rates are lower than short-term interest rates.
  3. Q3If the exchange rate changes from 90 Rupees per Dollar to 95 Rupees per Dollar, then the Rupee has depreciated, and it …
  4. Q4An American call option gives the holder the right to sell the underlying asset at the strike price only on the expiry …
  5. Q5A bank’s leverage ratio is defined as the ratio of its liabilities to its total assets.
  6. Q6Reserve requirements and deposit insurance are governance tools to develop safeguards against banking collapse.
  7. Q7If an investor writes a call option, her maximum potential loss is the strike price minus the premium received.
  8. Q8Suppose the current market price of a stock is Rs. 82. If a call option on this stock has a strike price of Rs. 80, the…
  9. Q9The Efficient Market Hypothesis asserts that an experienced trader can consistently achieve higher returns than the mar…
  10. Q10The risk-free rate is 2%. The expected market rate of return is 8%, and the standard deviation of the market return is …
  11. Q11In the Black-Scholes pricing formula, the stock prices are considered to be normally distributed.
  12. Q12A long position in an option describes holding an option contract with a maturity of more than 5 years.
  13. Q13A put option decreases in value when the stock price increases, with all else remaining the same.
  14. Q14A long straddle strategy requires buying both a call and a put option, each with the same strike price and the same exp…
  15. Q15The part of the minimum variance set that lies above the global minimum variance portfolio is called the efficient fron…
  16. Q16Suppose you purchased a call option 26 days ago for Rs. 4.50. The call option has a strike price of Rs. 84, and the sto…
  17. Q17OPQ Inc. has an expected rate of return of 25% and a standard deviation of the rate of return of 20%. The expected mark…
  18. Q18Suppose that the interest rate at a point in time in the domestic economy is 4%, and the interest rate in the foreign e…
  19. Q19A trader buys a call option on a stock with a strike price of Rs 48 when the option price is Rs 4. The trader makes a p…
  20. Q20Figure question
  21. Q21A firm has three divisions: sales division, accounting division and logistics division. The sales division has a beta o…
  22. Q22A stock currently trading at Rs 20 can either rise to Rs 25 or fall to Rs 16 in three months. The three-month risk-free…
  23. Q23Your expected return on a stock is 16%. The stock has a beta of 1.8. If the risk-free rate is 4% and the expected marke…
  24. Q24A risky asset has an expected rate of return of 16%, and the Sharpe ratio of this risky asset is 0.75. If the risk-free…
  25. Q25Figure question
  26. Q26Lokesh is considering investing in an opportunity that promises to pay Rs 3,000 in one year, Rs 2,500 in two years and …
  27. Q27The price of a six-month European put option on a non-dividend-paying stock with a strike price of Rs 450 is Rs 35. The…
  28. Q28The current price of a non-dividend-paying stock is Rs 60. Over the next six months, it is expected to rise to Rs 75 or…
  29. Q29Figure question
  30. Q31A stock is trading at Rs 80 today. In six months, the stock price can either increase to Rs 100 or decrease to Rs 70. T…
  31. Q32A one-year European call option with a strike price of Rs 80 is selling at a call price of Rs 6. A one-year European pu…
  32. Q33Figure question
  33. Q34An investor purchases one call option and two put options with the same strike price of Rs 65 and maturity of three mon…
  34. Q35A project is expected to have a payoff of Rs 5,000 in one year. The beta for the project is 1.5. If the risk-free rate …