Mathematics of FinanceMCQMTP May 18Question 1277 of 512
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The compound interest on a certain sum is 200\displaystyle 200 209\displaystyle 209 simple interest is 200\displaystyle 200 for 2\displaystyle 2 years. What is the rate per cent for 2\displaystyle 2 years?

Options

A9%\displaystyle 9\%
B18%\displaystyle 18\%
C4.5%\displaystyle 4.5\%
D10%\displaystyle 10\%
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Correct Answer

Option a9%\displaystyle 9\%

All Options:

  • A9%\displaystyle 9\%
  • B18%\displaystyle 18\%
  • C4.5%\displaystyle 4.5\%
  • D10%\displaystyle 10\%

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Detailed Solution & Explanation

**Derivation of Interest Rate** Given: - Simple Interest (SI\displaystyle SI) for 2\displaystyle 2 years = Rs. 200\displaystyle \text{Rs. }200 - Compound Interest (CI\displaystyle CI) for 2\displaystyle 2 years = Rs. 209\displaystyle \text{Rs. }209 **Step 1: Calculate Simple Interest per year** SI1=2002=Rs. 100SI_1 = \frac{200}{2} = \text{Rs. }100 **Step 2: Find the difference between CI and SI** Difference=CISI=209200=Rs. 9\text{Difference} = CI - SI = 209 - 200 = \text{Rs. }9 This difference is the interest earned on the first year's interest of Rs. 100 for 1 year. **Step 3: Solve for the rate of interest (R\displaystyle R)** Difference=SI1×R×1100\text{Difference} = \frac{SI_1 \times R \times 1}{100} 9=100×R×11009 = \frac{100 \times R \times 1}{100} 9=R    R=9% per annum9 = R \implies R = 9\% \text{ per annum} Hence, **Option A** 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.

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