Mathematics of FinanceMCQMTP Nov 18Question 1273 of 512
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If the difference between the interests received from two different banks on 5000\displaystyle 5000 for 2\displaystyle 2 years is 50\displaystyle 50 then the difference between this rates.

Options

A0.25%\displaystyle 0.25\%
B0.40%\displaystyle 0.40\%
C0.50%\displaystyle 0.50\%
D0.70%\displaystyle 0.70\%
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Correct Answer

Option c0.50%\displaystyle 0.50\%

All Options:

  • A0.25%\displaystyle 0.25\%
  • B0.40%\displaystyle 0.40\%
  • C0.50%\displaystyle 0.50\%
  • D0.70%\displaystyle 0.70\%

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Detailed Solution & Explanation

**Derivation of Difference in Interest Rates** Given: - Principal (P\displaystyle P) = Rs. 5,000\displaystyle \text{Rs. }5,000 - Time (t\displaystyle t) = 2\displaystyle 2 years - Difference in Simple Interest from two banks = Rs. 50\displaystyle \text{Rs. }50 **Step 1: Set up the Simple Interest difference equation** Let the two rates be r1\displaystyle r_1 and r2\displaystyle r_2. SI1SI2=P×(r1r2)×t100SI_1 - SI_2 = \frac{P \times (r_1 - r_2) \times t}{100} 50=5000×(r1r2)×210050 = \frac{5000 \times (r_1 - r_2) \times 2}{100} 50=100(r1r2)50 = 100 (r_1 - r_2) **Step 2: Solve for the difference in rates** r1r2=50100=0.50%r_1 - r_2 = \frac{50}{100} = 0.50\% Hence, **Option C** is the correct answer.

About This Chapter: Mathematics of Finance

Paper

Paper 3: Quantitative Aptitude

Weightage

12-16 Marks

Key Topics

Simple & Compound Interest, Annuity, Perpetuity

The most important mathematical chapter in the entire syllabus. It covers Simple Interest (SI), Compound Interest (CI), Nominal vs Effective rates, Present and Future Value, Annuities (Ordinary and Due), Sinking Funds, and Perpetuities. The concepts learned here are applied heavily in CA Intermediate and Final.

View Official ICAI Syllabus

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