Three amounts x, y, z are such that y is the compound interest on x; and z is the compound interest on y. The rate of interest per annum and the time period in years are same. Which one of the following is correct?

  1. A. x^2=yz
  2. B. y^2=zx
  3. C. z^2=xy
  4. D. x=yz

Correct Answer: B. y^2=zx

Explanation

Let the multiplier for the compound interest be K = (1 + \frac{R}{100})^T - 1. We are given y = Kx and z = Ky. Dividing the equations gives \frac{y}{x} = \frac{z}{y} \implies y^2 = zx.

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