Institute of Actuaries of India 2008 CT-2 Finance and Financial Reporting - Question Paper

INSTITUTE OF ACTUARIES OF INDIA
exams
21st May 2008
Subject CT2 – Finance and Financial Reporting
Time allowed: 3 Hours (10.00 – 13.00 Hrs)

Total Marks: 100
INSTRUCTIONS TO THE CANDIDATES
1. Do not write your name anywhere on the ans sheets. You have only to write your
Candidate's Number on every ans sheets.
2. Mark allocations are shown in brackets.
3. Attempt all questions, beginning your ans to every ques. on a separate sheet.
However, answers to objective kind ques. could be written on the identical sheet.
4. Fasten your ans sheets together in numerical order of ques.. This, you may
complete immediately after expiry of the exam time.
5. Candidates should show computations where this is improper.
6. In addition to this paper you should have available graph paper, Actuarial Table and an electronic calculator.


Professional Conduct:
"It is brought to your notice that in accordance with provisions contained in the Professional Conduct
Standards, If any candidate is obtained copying or involved in any other form of malpractice, during or in
connection with the examination, Disciplinary action will be taken against the candidate which may include
expulsion or suspension from the membership of IAI."
Candidates are advised that a reasonable standard of handwriting legibility is expected by the examiners
and that candidates may be penalized if undue effort is needed by the examiners to interpret scripts.



IAI CT2 0508
Q. 1) Which of the subsequent is treated as a credit item in the trial balance
I. Investment income
II. Short term investments
III. Credit purchases
IV. Depreciation
Options: - A. – IV only
B. – II and III
C. – I and IV
D. – I only
[2]
Q. 2) Which of the subsequent strategies would not help a company to decrease its exposure to
rising interest rates?
i. The negotiation of an interest rate swap
ii. The purchase of a put choice on an interest rate future
iii. The purchase of a bond future
iv. The sale of an interest rate future [2]

Q. 3) NTP Ltd paid Rs. 5,75,000 for 1,00,000 shares in PFC Ltd. PFC Ltd's share capital
was 1,50,000 shares of Rs. three per equity share, and at the time of the share purchase it
had reserves of Rs. 75,000. compute the goodwill associated with the purchase.

Earning:   Approval pending.