Match List-I with List-II
| List-I | List-II | ||
| (A) | Nominal rate of return | (I) | \( EMI=\displaystyle\frac{Principal+Interest}{Period\ in\ months} \) |
| (B) | CAGR | (II) | \( \displaystyle\frac{Original\ value\ of\ the\ asset-Salvage\ value\ of\ the\ asset}{Useful\ life\ of\ the\ asset} \) |
| (C) | Flat rate method | (III) | \( \displaystyle\frac{Current\ market\ value\ of\ investment-Original\ investment\ value}{Original\ investment\ value}\times 100 \) |
| (D) | Annual depreciation | (IV) | \( \left(\displaystyle\frac{Investment\ at\ the\ end\ of\ investment\ period}{Investment\ at\ the\ beginning\ of\ the\ period}\right)^{\frac{1}{(investment\ period)}}-1 \) |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (A) - (III), (B) - (IV), (C) - (I), (D) - (II)
(A) Nominal rate of return
This matches (III).
It is the total percentage gain on the original investment, without adjusting for time or inflation:
\( \displaystyle \text{Nominal rate of return}=\frac{\text{Current market value}-\text{Original investment}}{\text{Original investment}}\times 100 \)
(B) CAGR
This matches (IV).
The compound annual growth rate is the constant yearly rate that takes the beginning value to the ending value in n years:
\( \displaystyle \text{CAGR}=\left(\frac{\text{Ending value}}{\text{Beginning value}}\right)^{\frac{1}{n}}-1 \)
(C) Flat rate method
This matches (I).
In the flat rate method, interest is charged on the full principal for the whole period, and the total is spread equally over the months:
\( \displaystyle \text{EMI}=\frac{\text{Principal}+\text{Interest}}{\text{Period in months}} \)
(D) Annual depreciation
This matches (II).
Under the linear (straight line) method, the loss in value is spread equally over the useful life:
\( \displaystyle \text{Annual depreciation}=\frac{\text{Original value}-\text{Salvage value}}{\text{Useful life}} \)
So the matching is (A)-(III), (B)-(IV), (C)-(I), (D)-(II).