Aptitude - Stocks and Shares - Discussion

They have assumed that the face value of both stocks is Rs 100. One more assumption is that only one share has been bought.

We need to assume that face value for both investment is same.

We need to assume that face value for both investment is same.

How investment is 143*117?

There is another efficient way.

For 117 in the first case (11/143)*117=9,
For 117 in the second case 9+(given).
Clearly second wins.

11% stock at 143 yields 25.75 (less profit).

9% stock at 117 yields 30.12 (more profit) <= preferable.

Why answer is 2nd type of stock?

According to me,
1st case. 143*11%=15.73,
15.73/143*117=12.87,
2ndcase. 117*9.75%= 11.40.
So rate of interest is more in case 1st.

Let us assume face value of stock is Rs.100.

11% stock at 143 means:
11% = dividend rate which can be calculated on face value.i.e. dividend = 11% on 100 = Rs.11.
143 = market value of stock at which we can buy or sell the stock.

Here, we have to calculate the interest rate as we actually receive Rs.11 on investment of Rs.143 i.e. market value, the rate at which may be bought the stock.

Therefore, in 1st case interest rate = Rs.11/Rs.143 * 100=7.69%.
Similarly in 2nd case interest rate= Rs.9.75/Rs.117 * 100=8.33%.
As the interest is more in case 2.
The better investment is case 2.

As 143 and 117 is not a facevalue, its only market vallue. And we have to calculate the rates on facevalue only, hence in both the cases we take the respective market value.

@ALL.

I think the term percent is misleading here.

As percent simply means out of hundred. So in my view, 13% means 13 out of 100 and it is solved for 13 out of 143.