Mathematics of FinanceMCQMTP Dec 23 Series IQuestion 3944 of 512
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The amount charged for a defined length of time for uses of principal, generally on year basis is known as

Options

ABalance
BRate of Interest
CPrincipal
DInterest
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Correct Answer

Option bRate of Interest

All Options:

  • ABalance
  • BRate of Interest
  • CPrincipal
  • DInterest

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Detailed Solution & Explanation

Let's define the terms involved in financial mathematics: 1. **Principal**: The initial amount of money borrowed or invested. 2. **Interest**: The charge or cost for borrowing money, or the earnings from investing money. 3. **Rate of Interest**: The percentage of the principal charged or paid as interest for a defined length of time, generally on a yearly basis (per annum). 4. **Balance**: The total amount of money in an account at a given time. According to the definition, the amount charged for a defined length of time for the use of principal, generally on a yearly basis, is called the **Rate of Interest**. Hence, **Option B** 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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