Banker's Discount Questions

FACTS  AND  FORMULAE  FOR  BANKER'S  DISCOUNT  QUESTIONS

 

 

Banker's Discount : 

Suppose a merchant 'A' buys goods worth, say Rs. 10,000 from another merchant 'B' at a credit of say 5 months.Then, B prepares a bill, called the bill of exchange. A signs this bill and allows B to withdraw the amount from his bank account after exactly 5 months.

 

The date exactly after 5 months is called nominally due date. Three days (known as grace days) are added to it to get a date, known as legally due date.

 

Suppose B wants to have the money before the legally due date. Then he can have the money from the banker or a broker, who deducts S.I on the face value (i.e., Rs. 10,000 in this case) for the period from the date on which the bill was discounted (i.e , paid by the banker) and the legally due date. This amount is known as Banker's Discount (B.D) Thus, B.D is the S.I on the face value for the period from the date on which the bill was discounted and the legally due date.

 

Banker's Gain (B.G) = (B.D) - (T.D) for the unexpired time.

 

Note : When the date of the bill is not given, grace days are not to be added.

 

IMPORTANT FORMULAE

1. B.D = S.I on bill for unexpired time

 

2. B.G = (B.D) - (T.D) = S.I  on T.D=T.D2P.W

 

 

 

3. T.D=P.W×B.G

 

 

4. B.D=Amount×Rate×Time100

 

5. T.D=Amount×Rate×Time100+Rate×Time

 

6. Amount=B.D×T.DB.D-T.D

 

7. T.D=B.G×100Rate×Time

Q:

Two consecutive discounts x% and y% is equivalent to the discount

A) (x-y+xy100)% B) (x+y+xy100)%
C) (x-y-xy100)% D) (x+y-xy100)%
 
Answer & Explanation Answer: D) (x+y-xy100)%

Explanation:
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Exam Prep: Bank Exams

1 5184
Q:

The bankers discount and the true discount of a sum at 10% per annum simple interest for the same time are Rs.100 and Rs.80 respectively. What is the sum and the time?

A) Sum = Rs.400 and Time = 5 years B) Sum = Rs.200 and Time = 2.5 years
C) Sum = Rs.400 and Time = 2.5 years D) Sum = Rs.200 and Time = 5 years
 
Answer & Explanation Answer: C) Sum = Rs.400 and Time = 2.5 years

Explanation:

BD = Rs.100

TD = Rs.80

R = 10%

 

F=BD×TDBD-TD=100×80100-80=Rs.400 

 

BD = Simple interest on the face value of the bill for unexpired time= FTR/100

 

100=400×T×10100

=> T = 2.5 years

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4 5952
Q:

If the discount on Rs. 498 at 5% simple interest is Rs.18, when is the sum due?

A) 8 months B) 11 months
C) 10 months D) 9 months
 
Answer & Explanation Answer: D) 9 months

Explanation:

F = Rs. 498

TD = Rs. 18

PW = F - TD = 498 - 18 = Rs. 480

R = 5%

 

TD=PW×TR100

 

18=480×T×5100

 

=> T = 3/4 years = 9 months

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4 5243
Q:

What is the difference between the banker's discount and the true discount on Rs.8100 for 3 months at 5%

A) Rs. 2 B) Rs. 1.25
C) Rs. 2.25 D) Rs. 0.5
 
Answer & Explanation Answer: B) Rs. 1.25

Explanation:

F = Rs. 8100

R = 5%

T = 3 months = 1/4 years

 

BD=FTR100=8100×14×5100=Rs.101.25

 

TD=FTR100+TR=8100×14×5100+14×5=Rs.100

Therefore BD - TD = 101.25-100 = Rs.1.25

 

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1 5278
Q:

The banker's discount on a bill due 6 months hence at 6% is Rs. 18.54. What is the true discount?

A) Rs. 24 B) Rs. 12
C) Rs. 36 D) Rs. 18
 
Answer & Explanation Answer: D) Rs. 18

Explanation:
T= 6 months = 1/2 year

R = 6%

TD= BD×100100+TR=18.54×100100+12×6=Rs.18
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2 15895
Q:

The B.D. and T.D. on a certain sum is Rs.200 and Rs.100 respectively. Find out the sum.

A) Rs. 400 B) Rs. 300
C) Rs. 100 D) Rs. 200
 
Answer & Explanation Answer: D) Rs. 200

Explanation:

F=BD×TDBD-TD=200×100200-100=200×100100=Rs.200

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1 3120
Q:

The B.G. on a certain sum 4 years hence at 5% is Rs. 200. What is the present worth?

A) Rs. 4500 B) Rs. 6000
C) Rs. 5000 D) Rs. 4000
 
Answer & Explanation Answer: C) Rs. 5000

Explanation:

T = 4 years

R = 5%

Banker's Gain, BG = Rs.200

 

TD= BG×100TR=200×1004×5=Rs.1000

 

 TD=PW×BG

 

1000=PW×200

 

=>PW = Rs.5000

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3 4003
Q:

What is the present worth of a bill of Rs.1764 due 2 years hence at 5% compound interest is

A) Rs. 1600 B) Rs. 1200
C) Rs. 1800 D) Rs. 1400
 
Answer & Explanation Answer: A) Rs. 1600

Explanation:

Since the compound interest is taken here,

 

 PW1+51002=1764

 

=> PW = 1600

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