Harish invested Rs. 40,000 in a no-fee fund. After one year, the value of the fund rose to Rs. 60,000 then the nominal rate of return on the investment is
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → 50%
The nominal rate of return is the gain as a percentage of the amount invested (there are no fees to deduct).
\( \displaystyle \text{Rate of return}=\frac{\text{Final value}-\text{Initial value}}{\text{Initial value}}\times 100 \)
\( \displaystyle =\frac{60000-40000}{40000}\times 100 \)
\( \displaystyle =\frac{20000}{40000}\times 100=50\% \)