FREE JAIIB AFB Notes – Part 1 | BUSINESS MATHEMATICS AND FINANCE | JAIIB 2022
IIBF conducts JAIIB Exams, one of the flagship courses offered by it, twice a year. It is conducted in May & November every year. This course has 3 subjects and PPB or Principles & Practices of Banking is one. In this article, you will get some FREE Study Notes or FREE Short Notes of the AFB Paper of JAIIB 2022 from our JAIIB AFB Study Material for 2022.
Accounting & Finance for Banking has 4 modules which are further divided into units.
|Accounting & Finance for Banking||
FREE PPB SHORT NOTES 2022:-
I – MODULE: BUSINESS MATHEMATICS AND FINANCE:
- CALCULATION OF INTEREST
Simple Interest: Simple interest or flat rate interest is the amount of interest paid each year in a fixed %age of the borrowed or lent amount at the start.
The formula for calculating simple interest:-
|Interest = Principal x Rate x Time = PRT|
|‘Interest’ = I = Total interest amount paid|
|‘Principal’ = P = Lent or borrowed amount|
|‘Rate’ = R = %age of the principal charged as interest (p.a).|
|‘Time’ = T = Time of the loan (in years).|
Important Topic:- JAIIB AFB Mock Tests | accounting and finance for bankers
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P = Rs. 60,000.00, R = 10% i.e 0.10, T = 3 yrs. Find the interest amount paid.
Interest = PRT
= 60,000 x 0.10 x 3 = Rs. 18,000.00
Compound Interest: It is paid on the original principal amount & accumulated part of interest.
The formula for calculating compound interest:
|Principal = A (1 +r/n) n t|
|P = Principal Amount|
|A = Deposited Amount|
|r = the rate (expressed as a fraction)|
|n = no. of times per year that interest is compounded|
|t = no. of years invested|
Read Also:- JAIIB 2022 EXAM STUDY MATERIAL
Frequently compounding of Interest. If the interest is compounded:
|Annually = P (1 + r)|
|Quarterly = P (1 + r/4) 4|
|Monthly = P (1 + r/12) 12|
Important Topic:- JAIIB EXAM 2022
The compound interest on Rs. 60,000 at 7% per annum is Rs. 8694. The period (in years) will be?
A = Rs. (60000 + 8694) = Rs. 68,694.00
Let the time be n years.
Then, 60000 (1+7/100) n = 68694
(107/100) n = 68694/60000
(107/100) n = 11449/10000
(107/100) n = (107/100) 2
So, n = 2 years.
The Rule of 72: This allows you to determine the no. of years before your money doubles whether in investment or debt. Divide the number 72 by the rate (%)
|The time period for Money to double = 72/r|
If the FD interest rate is 6% & compounded yearly, how much time is required for it to double?
Time period for Money to double = 72/6 = 12 years
Equated monthly installment (EMIs): The monthly payment a borrower makes on his loan. It’s a combination of interest & principal repayment. The total monthly amount is calculated in such a way that it remains constant all through the repayment tenure. In EMIs, the principal & the interest thereon is repaid through the equal monthly installment over the fixed loan tenure. For borrowers the benefit of an EMI is that they know precisely the money they will need to pay toward their loan each month, making their budgeting process easier.
Important Topic:- JAIIB AFB STUDY MATERIAL 2022 – Accounting & Finance for Bankers
|E = P × r × (1 + r) n / ((1 + r) n – 1)|
|E = EMI|
|P = Principle Amount of Loan|
|r = rate of interest calculated on monthly basis = Annual Interest Rate/12/100|
|(if its 10% annual, then its 10/12/100=0.00833)|
|n = Tenure in no. of months|
For 100000 at 10% annual interest for a period of 12 months, it comes to:
= 100000*0.00833*(1 + 0.00833)12/((1 + 0.00833)12 – 1) = 8792
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