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Question

____________ is created to provide for the loss by way of fluctuation in the value of investment.

A
Investment fluctuation reserve
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B
Sinking fund
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C
Dividend equalization reserve
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D
Debenture redemption reserve
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Solution

The correct option is A Investment fluctuation reserve
Investments made by a concern are subject to market fluctuations and thus, the value of an investment can any time decrease suddenly in the market. So, Investment fluctuation reserve is maintained to overcome any sudden loss incurred due to a sudden fall in the realisable value of investments.

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