Statistics & Applications

Financial Math

Easy

applied

A person invested ₹ 2,50,000 in a fund. At the end of the year, the value of the fund is ₹ 3,00,000. If the market price is the same at the end of the year, then the nominal rate of return is

10%

15%

20%

12%

✅ Correct Option: 3

Given Information:

Initial Investment = ₹ 2,50,000

Final Value = ₹ 3,00,000

The gain from the investment:

Gain = Final Value - Initial Investment

Gain = ₹ 3,00,000 - ₹ 2,50,000

Gain = ₹ 50,000

The rate of return is calculated as:

Rate of Return = $\dfrac{\text{Gain}}{\text{Initial Investment}} \times 100$

Rate of Return = $\dfrac{50,000}{2,50,000} \times 100$

Rate of Return = $\dfrac{50}{250} \times 100$

Rate of Return = $\dfrac{1}{5} \times 100$

Rate of Return = $20\%$

Therefore, the nominal rate of return is 20%.

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Choose the correct answer from the options given below:

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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:

A person invested ₹ 2,50,000 in a fund. At the end of the year, the value of the fund is ₹ 3,00,000. If the market price is the same at the end of the year, then the nominal rate of return is

Solution

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