Match the following financial terms with their most suitable meaning/synonym:
| List-I | List-II | ||
| (A) | Perpetuity | (I) | Deposit with purpose |
| (B) | Sinking Fund | (II) | Asset value reduction |
| (C) | Bond | (III) | Forever lasting annuity |
| (D) | Depreciation | (IV) | Debt instrument |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A)-(III), (B)-(I), (C)-(IV), (D)-(II)
(A) Perpetuity
This matches (III) Forever lasting annuity. A perpetuity is an annuity whose payments continue for ever.
(B) Sinking Fund
This matches (I) Deposit with purpose. A sinking fund is built up by regular deposits to meet a known future expense, such as replacing a machine or repaying a debt.
(C) Bond
This matches (IV) Debt instrument. A bond is a loan to the issuer, who pays interest (coupons) and repays the face value at maturity.
(D) Depreciation
This matches (II) Asset value reduction. Depreciation is the fall in the value of an asset through use and age.
So the matching is (A)-(III), (B)-(I), (C)-(IV), (D)-(II).