JAIIB AFM Most Expected Questions Part - 8, Important MCQs for Exam Preparation

JAIIB AFM Most Expected Questions Part 8 focuses on Negotiable Instruments governed by the Negotiable Instruments Act, 1881, a chapter that frequently appears in both theory and practical MCQs. Many candidates lose easy marks due to confusion between Bills of Exchange, Promissory Notes, and Cheques, especially in areas like parties involved, maturity calculation, endorsement, dishonour, and bill discounting.

This topic takes into account the legal concepts with practical banking applications, making it highly scoring when the basics are clear. Once you understand the definitions, rules, and due-date calculations, most questions from this section become straightforward and quick to solve in the exam.

Why Negotiable Instruments Matter in JAIIB AFM?

This chapter is important because it combines law-based concepts with numerical understanding. Questions can be asked in MCQ form, statement-based format, or case studies.

Why you should focus here

• Frequently asked in AFM exam

• Easy scoring with concept clarity

• Includes practical banking usage

• Numerical questions possible from due dates and bills

• Helpful for real banking knowledge

A well-prepared student can score quickly from this section.

JAIIB AFM Most Expected MCQ Questions

JAIIB AFM Most Expected MCQ Questions are important because the exam regularly includes objective questions from topics like ratio analysis, costing, budgeting, capital budgeting, and negotiable instruments. Practicing these questions helps you understand common patterns, improve speed, and increase accuracy before the final exam.

Q1. With reference to Bills of Exchange, consider the following statements:

1. A bill of exchange is always an unconditional promise to pay.

2. Acceptance by the drawee is mandatory for its validity.

3. The drawer and the payee can be the same person.

Which of the above statements is/are correct?

1. 1 and 2 only

2. 2 and 3 only

3. 3 only

4. 1, 2 and 3

Q2. With reference to the Promissory Note, consider the following:

1. It involves three parties, like a bill of exchange.

2. It contains an unconditional undertaking.

3. Acceptance is not required.

Which of the above statements is/are correct?

1.  1 and 2 only

2.  2 and 3 only

3.  1 only

4. 1, 2 and 3

Q3. Consider the following statements regarding a cheque:

1. It is a bill of exchange drawn on a specified banker.

2. It is always payable on demand.

3. It requires acceptance like a bill of exchange.

Which of the above statements is/are correct?

A. 1 and 2 only

B. 2 only

C. 1, 2 and 3

D. 1 and 3 only

Q4. With reference to the maturity of bills, consider:

1. Three days of grace are always added to determine maturity.

2. Bills payable on demand also get days of grace.

3. If due date falls on a public holiday, it shifts to the previous working day.

Which of the above statements is/are correct?

A. 1 and 3 only

B. 2 and 3 only

C. 1 only

D.  1, 2 and 3

Q5. A bill is drawn on 10th Jan for 2 months. What is the due date?

a) 10th March

b) 13th March

c) 12th March

d) 11th March

Q6. With reference to dishonour of a bill, consider:

1. Noting is compulsory for dishonour.

2. Notary public records dishonour.

3. Noting that charges are borne initially by the holder.

Which of the above statements is/are correct?

A. 2 and 3 only

B. 1 and 2 only

C. 3 only

D. 1, 2 and 3

Q7. Consider the following regarding endorsement:

1. It transfers ownership of the bill.

2. Endorsee becomes the holder.

3. It extinguishes the liability of prior parties.

Correct answer:

A. 1 and 2 only

B. 2 and 3 only

C. 1 only

D. 1, 2 and 3

Q8. In case of discounting of a bill:

1. Bank becomes holder of the bill.

2. Drawer's liability is completely discharged.

3. Discount is treated as an expense.

Correct answer:

A. 1 and 3 only

B.2 and 3 only

C. 1 only

D. 1, 2 and 3

Q9. With reference to the renewal of the bill, consider:

1. Old bill must be cancelled first.

2. Interest is charged on the outstanding amount.

3. New bill includes an interest component.

Correct answer:

A. 1 and 2 only

B. 2 and 3 only

C. 1, 2 and 3

D. 1 only

Q10. In case of the retirement of the bill:

1. Payment is made before the due date.

2. Rebate is allowed to the drawee.

3. Rebate is income for the drawer.

Correct answer:

A. 1 and 2 only

B. 2 and 3 only

C. 1 and 3 only

D. 1, 2 and 3

Q11. Case Study: A draws a bill on B for ₹20,000. B accepts. A discounts the bill at ₹19,200. On due date, bill is dishonoured and noting charges ₹200 are paid by bank.

Consider the following:

1. A is liable to the bank for ₹20,200.

2. Discount loss = ₹800.

3. B's liability = ₹20,200.

Correct answer:

A.1 and 2 only

B. 2 and 3 only

C. 1 and 3 only

D. 1, 2 and 3

How to Prepare This Topic for JAIIB AFM?

Preparing this topic for JAIIB AFM is easier when you first build a clear concept understanding and then move to regular MCQ practice. Begin with key definitions, formulas, and practical uses, then solve previous questions and mock tests to improve speed, accuracy, and confidence for the exam.

Best preparation strategy

• Learn the differences between all instruments

• Practice maturity date numerals

• Revise statement-based MCQs

• Solve case studies on discounting

• Memorise party names clearly

• Attempt chapter-wise mocks

With revision, this chapter becomes one of the easiest scoring areas.

Negotiable Instruments is a concept-based chapter where small confusion causes wrong answers. Keep your focus on definitions, parties, legal rules, and due-date calculations. If you revise these areas properly, you can score confidently in JAIIB AFM Most Expected Questions Part -8.

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