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TOTAL QUESTION: 15
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Question 1 of 15
1. Question
What does EMI stand for?
Correct
EMI stands for Equated Monthly Installment, which is the fixed periodic payment made toward a loan.
Incorrect
EMI stands for Equated Monthly Installment, which is the fixed periodic payment made toward a loan.
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EMI stands for Equated Monthly Installment, which is the fixed periodic payment made toward a loan.
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Question 2 of 15
2. Question
Which two main components are included in a loan EMI?
Correct
An EMI generally consists of both the principal repayment and the interest charged on the outstanding loan.
Incorrect
An EMI generally consists of both the principal repayment and the interest charged on the outstanding loan.
Unattempted
An EMI generally consists of both the principal repayment and the interest charged on the outstanding loan.
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Question 3 of 15
3. Question
What is meant by the principal in a loan?
Correct
The principal is the actual amount borrowed from the lender before considering the interest payable.
Incorrect
The principal is the actual amount borrowed from the lender before considering the interest payable.
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The principal is the actual amount borrowed from the lender before considering the interest payable.
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Question 4 of 15
4. Question
What does loan tenure refer to?
Correct
Loan tenure is the total period over which the borrower is required to repay the loan.
Incorrect
Loan tenure is the total period over which the borrower is required to repay the loan.
Unattempted
Loan tenure is the total period over which the borrower is required to repay the loan.
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Question 5 of 15
5. Question
In the standard EMI formula, what does ‘P‘ represent?
Correct
In the EMI formula, P represents the principal or original loan amount.
Incorrect
In the EMI formula, P represents the principal or original loan amount.
Unattempted
In the EMI formula, P represents the principal or original loan amount.
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Question 6 of 15
6. Question
How is the monthly interest rate generally obtained when using the standard EMI formula?
Correct
For a monthly EMI calculation, the annual interest rate is generally divided by 12 to obtain the monthly rate, assuming the rate is expressed on a monthly basis.
Incorrect
For a monthly EMI calculation, the annual interest rate is generally divided by 12 to obtain the monthly rate, assuming the rate is expressed on a monthly basis.
Unattempted
For a monthly EMI calculation, the annual interest rate is generally divided by 12 to obtain the monthly rate, assuming the rate is expressed on a monthly basis.
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Question 7 of 15
7. Question
Which of the following is commonly repaid through EMIs?
Correct
Home loans are commonly repaid through monthly EMIs over a specified tenure.
Incorrect
Home loans are commonly repaid through monthly EMIs over a specified tenure.
Unattempted
Home loans are commonly repaid through monthly EMIs over a specified tenure.
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Question 8 of 15
8. Question
What generally happens to the interest component of an EMI as the loan progresses?
Correct
As the outstanding principal reduces, the interest calculated on it generally decreases, while the principal component of the EMI increases.
Incorrect
As the outstanding principal reduces, the interest calculated on it generally decreases, while the principal component of the EMI increases.
Unattempted
As the outstanding principal reduces, the interest calculated on it generally decreases, while the principal component of the EMI increases.
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Question 9 of 15
9. Question
What is the usual effect of increasing the loan amount while keeping the interest rate and tenure unchanged?
Correct
A higher principal amount generally results in a higher EMI when the interest rate and repayment tenure remain unchanged.
Incorrect
A higher principal amount generally results in a higher EMI when the interest rate and repayment tenure remain unchanged.
Unattempted
A higher principal amount generally results in a higher EMI when the interest rate and repayment tenure remain unchanged.
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Question 10 of 15
10. Question
What is the usual effect of a higher interest rate on EMI when the loan amount and tenure remain unchanged?
Correct
A higher interest rate generally increases the EMI for the same principal and tenure.
Incorrect
A higher interest rate generally increases the EMI for the same principal and tenure.
Unattempted
A higher interest rate generally increases the EMI for the same principal and tenure.
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Question 11 of 15
11. Question
What is a common effect of choosing a longer loan tenure?
Correct
A longer tenure generally reduces the monthly EMI but increases the total interest paid over the life of the loan.
Incorrect
A longer tenure generally reduces the monthly EMI but increases the total interest paid over the life of the loan.
Unattempted
A longer tenure generally reduces the monthly EMI but increases the total interest paid over the life of the loan.
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Question 12 of 15
12. Question
Why do fixed EMI payments help borrowers with financial planning?
Correct
Predictable EMI payments make it easier for borrowers to plan their monthly budgets and cash flows.
Incorrect
Predictable EMI payments make it easier for borrowers to plan their monthly budgets and cash flows.
Unattempted
Predictable EMI payments make it easier for borrowers to plan their monthly budgets and cash flows.
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Question 13 of 15
13. Question
What can loan prepayment help a borrower reduce?
Correct
Making a permitted lump-sum prepayment can reduce the outstanding principal and may lower the total interest payable.
Incorrect
Making a permitted lump-sum prepayment can reduce the outstanding principal and may lower the total interest payable.
Unattempted
Making a permitted lump-sum prepayment can reduce the outstanding principal and may lower the total interest payable.
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Question 14 of 15
14. Question
What can happen if a borrower repeatedly misses EMI payments?
Correct
Missing EMI payments can lead to penalties and may negatively affect the borrower‘s credit history or credit score.
Incorrect
Missing EMI payments can lead to penalties and may negatively affect the borrower‘s credit history or credit score.
Unattempted
Missing EMI payments can lead to penalties and may negatively affect the borrower‘s credit history or credit score.
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Question 15 of 15
15. Question
How can a good credit score benefit a borrower when taking a loan?
Correct
A strong credit profile may help a borrower qualify for better lending terms, including a potentially lower interest rate.
Incorrect
A strong credit profile may help a borrower qualify for better lending terms, including a potentially lower interest rate.
Unattempted
A strong credit profile may help a borrower qualify for better lending terms, including a potentially lower interest rate.