Stocks and Shares Practice Test 2

Question : 21 of 36

Marks: +1, -0

Which is better, a stock 8% at 175 or 5% at 106?

8% at 175
5% at 106
Both are same
Cannot be compared
Data inadequate

Solution:

Let the investment in each stock = (175 × 106)
Income from 8% stock at Rs 175
On investment of Rs 175, income = Rs 8
On investment of (175 × 106) income =

8 /175 × 175 × 106

= Rs 848
On investment of Rs 106, income = Rs 5
On investment of (175 × 106) income =

5/106× 175× 106

= Rs 875
So, investment 5% stock at 106 is better.

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