Mathematics · Financial Mathematics
Consider the following statements regarding financial principles: Statement 1: The Power of Compounding allows an investor to earn interest on both the initial principal and accumulated interest, leading to exponential growth over time. Statement 2: The Rule of 72 estimates the time required for an investment to double by dividing 72 by the annual fixed rate of return. Statement 3: The real rate of return on an investment is calculated by adding the nominal interest rate to the prevailing inflation rate. Which of the following options correctly describes the validity of these statements?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Statement 2 is correct, but Statements 1 and 3 are incorrect.
- 2All statements are incorrect.
- 3Statement 3 is the only correct statement among the three.
- 4Statement 1 and Statement 2 are correct, but Statement 3 is incorrect.✓
Correct answer
Statement 1 and Statement 2 are correct, but Statement 3 is incorrect.
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