UniGeniusExam CM1

Exam CM1

CM1 practice questions

Original questions in the style of both papers, sorted by syllabus area, each with hints, a worked solution and a marking schedule.

Paper A3 hours 20 minutes, answers typed in Word
Paper B1 hour 50 minutes, answers built in Excel

Past papers

Past papers and examiners' reports moved to the members' learning site on 15 October 2025. Non-members can ask for guest access. The questions here are original and add to them rather than copy them.

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Discount and interest on a promissory note

Paper A style · Interest rates · Straightforward · 6 marks

A finance company buys a promissory note that will pay £25,000 in exactly one year. It pays £23,850 for the note today.

  1. (i)
    Calculate the effective annual rate of discount earned by the company, as a percentage to 4 decimal places.
    1 mark
  2. (ii)
    Calculate the effective annual rate of interest earned, as a percentage to 4 decimal places.
    1 mark
  3. (iii)
    Explain by general reasoning why  , where  , and verify that your answers to (i) and (ii) satisfy this relationship.
    2 marks
  4. (iv)
    The company's alternative is to lend at an effective rate of interest of 4.9% a year. Calculate the maximum price it should pay for the note, to the nearest penny, and comment on whether the purchase at £23,850 is attractive.
    2 marks

Next step

Take the free diagnosticRates, discount and the force of interest

The CM1 subject page

Questions people ask

Do the questions use the official tables?

No. Questions give the values they need, or use this course's own life table, so every number can be checked.