JAIIB AFM Unit 21 — Financial Mathematics - Calculation of Interest and Annuities: Free MCQs with Explanations
By Swarnakshi Jha (ex-banker) · Updated 20 September 2026 · Paper 3 of the November 2026 cycle (28 November 2026)
This page is a free slice of our JAIIB AFM question bank for Unit 21 — Financial Mathematics - Calculation of Interest and Annuities (Module C — Financial Management). The Mock Centre holds 39 questions on this unit alone, every one with a why-right / why-wrong explanation; below are the facts examiners keep returning to, five of those questions to try, and the traps that cost marks.
AFM · Module C39 MCQs in the Mock Centre5 free belowPaper on 28 November 2026
Key facts examiners test from this unit
Simple interest = P × R × T (on the ORIGINAL principal only): 40,000 × 11% × 3 = 13,200; repayment = P + I (60,000 @12% × 2 → 74,400).
Effective rate > nominal rate whenever compounding is more than annual.
5 free practice questions — tap an option
Five basic questions from this unit. Answers lock on the first tap, exactly as in the exam, and a short explanation opens underneath. The Mock Centre adds the moderate and tough questions, why every other option is wrong, the concept capsule and the exam tip — with your score and revision dates tracked.
Question 1 of 5
Simple interest on ₹40,000 at 11% p.a. for 3 years is:
Why (b): 40,000 × 11% × 3 = ₹13,200.
Question 2 of 5
More frequent compounding (given the same nominal rate and time) results in:
Why (b): More frequent compounding lets interest start earning interest sooner — monthly beats quarterly beats annual for the same nominal rate.
Question 3 of 5
In an ORDINARY annuity, the payment is made:
Why (b): An ORDINARY annuity pays at the END of each period — the standard loan-EMI pattern.
Question 4 of 5
An EMI is an example of:
Why (b): Equal payments at equal intervals = an ANNUITY (an ordinary one, paid at month-end).
Question 5 of 5
A depositor pays Rs 2,000 into a Recurring Deposit on the 1st of every month. This payment stream is best described as:
Why (b): Payments at the START of each period make it an annuity DUE; the RD itself embodies the sinking-fund idea — regular deposits accumulating to a target.
0 of 5 answered.
Traps in this unit
Confusable A
Confusable B
The difference
Simple interest
Compound interest
Original principal only vs interest on interest
Nominal rate
Effective rate
Quoted p.a. vs actual after intra-year compounding
Practise all 39 questions on Unit 21. The free demo opens a slice of every subject with the same explanations; the AFM Online-only pass unlocks all 1,681 AFM questions, the full and module mocks, Smart Revision and the Readiness Score for one year (₹1,299). Not sure where you stand? Take the free 10-question test first.
Independent study aid — not affiliated with, endorsed by, or sponsored by the Indian Institute of Banking & Finance (IIBF). Exam pattern, dates, fees and passing criteria are set by IIBF — always confirm the current rules at iibf.org.in. Regulatory figures verified as of September 2026; verify from official sources before relying on them in practice.
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