Which is the better investment: an 11% stock at 143 or a 9% stock at 117?
A. 11% stock at 143
B. 9 3/4% stock at 117
C. Both are equally good
D. Cannot be compared, as the total amount of investment is not given.
Answer:B
Which is the better investment: an 11% stock at 143 or a 9% stock at 117?
A. 11% stock at 143 B. 9 3/4% stock at 117 C. Both are equally good D. Cannot be compared, as the total amount of investment is not given.
Explanation: Let's say each case's investment is Rs (143 x 117).the first example, income equals Rs. 11/143 x 143 x 117 = Rs. 1287.In the second example, the income is Rs. 39/4 x 117 × 143 x 117 = Rs. 1394.25.Obviously, a 9 3/4 percent stock at 117 is preferable.