Banker's Discount— Concepts, Formulas & Shortcuts
- Banker's Discount (BD) = simple interest on the FACE VALUE for the unexpired time.
- True Discount (TD) = simple interest on the PRESENT WORTH for the same time.
- Banker's Gain (BG) = BD − TD, and it is always positive.
- BG = (TD)² / PW — a fast route when PW and TD are known.
- BD = (Amount × R × T)/100; TD = (Amount × R × T)/(100 + R × T).
- Banker's Discounted Value (what the holder receives) = Amount − BD.
Banker's Discount Practice Questions with Answers
Attempt each question first, then open the explanation. All 16 questions below are free to read and require no signup.
Q1.Banker's discount is the simple interest on the:
Easy- APresent worth
- BFace value of the bill
- CTrue discount
- DBanker's gain
Banker's Discount question 1 of 16+Show Answer & Explanation
Answer: B. Face value of the bill
Explanation: The bank computes interest on the full face value for the unexpired period.
Q2.Banker's gain is defined as:
Easy- ABD + TD
- BBD − TD
- CTD − BD
- DBD × TD
Banker's Discount question 2 of 16+Show Answer & Explanation
Answer: B. BD − TD
Explanation: The gain is the excess of banker's discount over true discount.
Q3.The banker's discount on ₹1,600 due 6 months hence at 15% per annum is:
Moderate- A₹100
- B₹120
- C₹240
- D₹150
Banker's Discount question 3 of 16+Show Answer & Explanation
Answer: B. ₹120
Explanation: BD = 1600 × 15 × 0.5/100 = ₹120.
Q4.If the true discount is ₹100 and the banker's discount is ₹110, the banker's gain is:
Easy- A₹5
- B₹10
- C₹100
- D₹210
Banker's Discount question 4 of 16+Show Answer & Explanation
Answer: B. ₹10
Explanation: BG = BD − TD = 110 − 100 = ₹10.
Q5.Banker's gain can also be calculated as:
Difficult- A(TD)²/PW
- B(BD)²/PW
- CPW/TD
- DTD × PW
Banker's Discount question 5 of 16+Show Answer & Explanation
Answer: A. (TD)²/PW
Explanation: BG equals the simple interest on the true discount, which simplifies to TD²/PW.
Q6.The amount a bill-holder actually receives on discounting a bill is:
Moderate- AFace value + BD
- BFace value − BD
- CPresent worth + BG
- DTrue discount
Banker's Discount question 6 of 16+Show Answer & Explanation
Answer: B. Face value − BD
Explanation: The bank deducts the banker's discount from the face value and pays the balance.
Q7.The banker's discount on ₹2,400 due 1 year hence at 10% per annum is:
Easy- A₹200
- B₹218
- C₹240
- D₹260
Banker's Discount question 7 of 16+Show Answer & Explanation
Answer: C. ₹240
Explanation: BD = 2400 × 10 × 1/100 = ₹240 — simple interest on the full face value.
Q8.If the banker's discount is ₹120 and the true discount is ₹110, the banker's gain is:
Easy- A₹5
- B₹10
- C₹110
- D₹230
Banker's Discount question 8 of 16+Show Answer & Explanation
Answer: B. ₹10
Explanation: BG = BD − TD = 120 − 110 = ₹10.
Q9.The banker's discounted value (the sum actually paid to the holder) equals:
Moderate- AFace value + BD
- BFace value − BD
- CPresent worth − TD
- DBD + TD
Banker's Discount question 9 of 16+Show Answer & Explanation
Answer: B. Face value − BD
Explanation: The bank deducts the banker's discount from the face value.
Q10.The banker's gain equals the simple interest on the:
Difficult- AFace value
- BPresent worth
- CTrue discount
- DBanker's discount
Banker's Discount question 10 of 16+Show Answer & Explanation
Answer: C. True discount
Explanation: BG is the interest on the true discount for the unexpired period, which is why BG = TD²/PW.
Q11.The banker's discount on ₹5,000 due 6 months hence at 12% per annum is:
Moderate- A₹250
- B₹280
- C₹300
- D₹600
Banker's Discount question 11 of 16+Show Answer & Explanation
Answer: C. ₹300
Explanation: BD = 5000 × 12 × 0.5/100 = ₹300.
Q12.The banker's discount on ₹1,000 due 1 year hence at 12% per annum is:
Easy- A₹100
- B₹110
- C₹120
- D₹150
Banker's Discount question 12 of 16+Show Answer & Explanation
Answer: C. ₹120
Explanation: BD = 1000 × 12 × 1/100 = ₹120.
Q13.If BD = ₹200 and TD = ₹180, the banker's gain is:
Easy- A₹10
- B₹20
- C₹180
- D₹380
Banker's Discount question 13 of 16+Show Answer & Explanation
Answer: B. ₹20
Explanation: BG = BD − TD = 200 − 180 = ₹20.
Q14.Banker's discount is always ___ true discount.
Moderate- ALess than
- BGreater than
- CEqual to
- DHalf of
Banker's Discount question 14 of 16+Show Answer & Explanation
Answer: B. Greater than
Explanation: BD is interest on the larger face value, so it always exceeds TD.
Q15.The banker's discount on ₹3,600 due 4 months hence at 15% per annum is:
Moderate- A₹150
- B₹180
- C₹200
- D₹540
Banker's Discount question 15 of 16+Show Answer & Explanation
Answer: B. ₹180
Explanation: 4 months = 1/3 year → BD = 3600 × 15 × (1/3)/100 = ₹180.
Q16.If the banker's gain on a bill is ₹24 and the true discount is ₹120, the present worth is:
Difficult- A₹500
- B₹600
- C₹720
- D₹840
Banker's Discount question 16 of 16+Show Answer & Explanation
Answer: B. ₹600
Explanation: BG = TD²/PW → 24 = 14400/PW → PW = ₹600.
Banker's Discount — Frequently Asked Questions
Why is banker's discount larger than true discount?+
Because the bank charges interest on the full face value of the bill, whereas the true discount is interest only on the present worth, which is smaller. The difference is the banker's gain.
What does the banker's gain represent?+
It is the bank's extra earning from charging interest on the face value rather than the present worth. Numerically it equals TD²/PW, and it is also the simple interest on the true discount.
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