Aptitude - Stocks and Shares - Discussion

This is how it is:

You need to find the value of profit for both the cases, therefore.

Make the values 100 to make it easier.

1. For 11% stock/share at 143,

143 Rs : 11 Rs : 100 Rs : x Rs.

143x = 1100.

So, x = 7.692 which is the profit on 1st case.

2. For 9.75% stock/share at 117,

117 Rs : 9.75 Rs :: 100 Rs : x Rs.

So, 117x = 975.

Therefore, x = 8.333 which is the profit in 2nd case.

8.333>7.692, therefore best investment would be 2nd.

I can't understand why two investment 117 and 143 are multiplied when the actual question is what is the best investment. No mention that investor have to invest these two both at a time on question.

117 & 143 are multiplied only as an assumption.

I can't understand completely, so please explain in a easy way.

Answer.

143/11 = 13.
117/9 = 13.

Both are equal and good.

There is the only thing which is creating a problem, that is face value.

What is the Face value? If not given take it as 100 always.

Here or anywhere if it is written 11% stock at 143 it means 11 Rupee's you will gain by investing 143 Rupees.

For this question.

If we put 143 we get 11 rupees.
So if we put 1 rupee we get 11/143.

And, in another case.

If we put 117 Rs we get 39/4 rupees.
So for 1 rupee we get (39/4) * (1/117).
11/143 < (39/4) * (1/117).

For making calculation simple, instead of 1 rupee they compared it for 143 * 117 rupees, as it will cancel some value.

Rate of return = (dividend/investment) * 100.

1st case:

11 = (d1/143) * 100,
d1 = Rs. 15.73.

2nd case:

(39/4) = (d2/117) * 100,
d2 = Rs. 11.4075.

Answer : option A. Because dividend (d1) > dividend (d2).

@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.

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.

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.