Which is the better investment: 11 percent stock at 143 or 9¾ percent stock at 117?

Given data

• Choice A: 11 percent at 143 ⇒ yield = 11/143
• Choice B: 9¾ percent at 117 ⇒ yield = 9.75/117

Concept / Approach

• Higher dividend per rupee invested implies better investment.

Step-by-step calculation

Yield A = 11/143 ≈ 0.07692 = 7.692 percentYield B = 9.75/117 = 0.083333... = 8.333 percentCompare: 8.333 percent > 7.692 percent ⇒ 9¾% stock at 117 is better

Verification

Both computations use dividend per Rs 100 face divided by market price, the standard convention.

Common pitfalls

• Comparing coupon rates alone without adjusting for market price.
• Taking percentage of face value rather than price paid.

Final Answer

9¾% stock at 117