NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Time Value of Money
Using the Rule of 72, approximately how many years will it take for an investment to double at 8% per annum compound return?
It takes approximately 9 years. The Rule of 72 estimates doubling time by dividing 72 by the annual compound rate of return, so 72 divided by 8 equals 9 years.
- A6 years
- B8 years
- C9 yearsCorrect
- D12 years
Explanation
Rule of 72: years to double = 72 / 8 = 9 years. Option 8 years confuses the rate with the time period. Option 12 years would be at 6%.
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