Statistics & Applications

Financial Math

Medium

applied

Which of the following statements are correct about the Compound Annual Growth Rate (CAGR)?

(A) It can be used to compare historical returns on different investment portfolios.

(B) It helps smooth returns when growth rates are expected to be volatile and inconsistent.

(C) It is unable to track the performance of various business measures of one or multiple companies alongside one another.

(D) It can be used to calculate the average growth of a single investment.

Choose the correct answer from the options given below:

(A), (B) and (D) only

(A), (B) and (C) only

(A), (C) and (D) only

(B) and (D) only

✅ Correct Option: 1

CAGR (Compound Annual Growth Rate) represents the steady annual growth rate showing how much an investment would have grown if it grew at the same rate every year.

Statement (A): It can be used to compare historical returns on different investment portfolios.

This is correct. CAGR allows fair comparison of different investments over the same time period by providing a standardized annual growth rate.

Statement (B): It helps smooth returns when growth rates are expected to be volatile and inconsistent.

This is correct. CAGR converts volatile year-to-year returns into one smooth average annual rate, eliminating the impact of fluctuations.

Statement (C): It is unable to track the performance of various business measures of one or multiple companies alongside one another.

This is incorrect. CAGR can effectively track and compare multiple business measures such as revenue growth, profit growth, or customer base growth across different companies.

Statement (D): It can be used to calculate the average growth of a single investment.

This is correct. CAGR calculates the average annual growth rate of an investment over a specified period.

Statements (A), (B), and (D) are correct.

Statement (C) is incorrect.

Therefore, the correct answer is: (A), (B) and (D) only.

2025: 13 May Shift 2

Let $P, I$ and $n$ be the principal of the loan, the total interest on the principal and number of months in the loan period respectively, then the EMI by Flat Rate Method is:

2026: 22 May Shift 1

Vishal invested ₹20,000 in Tata stocks for 6 years. The value of the investment at the end of each year is given below:

Year 1	Year 2	Year 3	Year 4	Year 5	Year 6
₹20,000	₹23,500	₹24,000	₹24,800	₹25,000	₹28,000

The CAGR % of his investment is: [use $(1.4)^{1/6}=1.058$ ]

2026: 19 May Shift 2

A person has invested ₹ 20,000 in hundred-rupees bond and redeemable at the end of 10 years at 110, and paying annual dividends at 4%. The yield rate is to be 5% effective. Then which of the following statements are TRUE?

A. The annual dividend is ₹ 800.

B. The annual dividend is ₹ 1200.

C. Redemption price is ₹ 22000.

D. Redemption price is ₹ 20000.

Choose the correct answer from the options given below:

2025: 21 May Shift 1

Which of the following statements are correct?

(A) In the sinking fund a fixed amount at regular intervals is deposited.

(B) Sinking fund is a long-term account which can be closed any time.

(D) Sinking fund can be used only for the purpose it was created.

Choose the correct answer from the options given below:

2026: 15 May Shift 1

Which of the following are correct about sinking fund?

A. It is a long-term account which can be closed any time.

B. It is a fixed term account.

C. It can be used only for the purpose it was created.

D. It is set up for a particular upcoming expense.

Choose the correct answer from the options given below:

2025: 30 May Shift 1

A man takes a personal loan worth Rs.3,00,000 at an interest rate of 6% per annum compounded monthly to be repaid by equal monthly installments in 3 years, then the EMI using flat rate method will be:-

Solution

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