Question

Which is the better investment: a stock of 5% at Rs 120 or a stock of 6% at Rs 132, if the investment is Rs 13,200?

Answer 1

Given:

Investment = Rs. 13200

A stock of 5% at Rs 120

A stock of 6% at Rs 132

To find:

Which is the better investment?

Solution:

Case (1): A stock of 5% at Rs 120

Investment = Rs. 13200

So, no. of shares bought = $\frac{13200}{120}$ = 110

∴ Income obtained from 110  shares = 5 × 110 = Rs. 550

Case (2): A stock of 6% at Rs 132

Investment = Rs. 13200

So, no. of shares bought = $\frac{13200}{132}$ = 100

∴ Income obtained from 100 shares = 6 × 100 = Rs. 600

From the calculations of the above two cases we can see that the income obtained from the stock of 6% at Rs. 132 is more than that of the income obtained from the stock of 5% at Rs. 120.

Thus, the stock of 6% at Rs 132 is the better investment.

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