Which quoted stock gives higher yield? Compare: 5% stock at 143 versus 3 1/2% stock at 93. Which is the better investment (higher yield)?

Introduction / Context:To compare two quoted stocks, compute each yield = (Dividend per 100 / Price per 100) * 100. The higher yield indicates the better investment if risk and other factors are comparable.

Given Data / Assumptions:

• Stock A: 5% at 143.
• Stock B: 3.5% at 93.
• No taxes or brokerage considered; identical risk assumed.

Concept / Approach:Yield(A) = 5/143 * 100. Yield(B) = 3.5/93 * 100. Compare the resulting percentages numerically.

Step-by-Step Solution:Yield(A) = (5 / 143) * 100 ≈ 3.4965%.Yield(B) = (3.5 / 93) * 100 ≈ 3.7634%.Since 3.7634% > 3.4965%, Stock B is better.

Verification / Alternative check:A quick check uses proportions: for equal cash, lower price increases nominal bought, which can outweigh a lower coupon. Here, the lower price of 93 boosts effective yield above the 5% coupon at a heavy premium of 143.

Why Other Options Are Wrong:“5% at 143” has the lower yield; “Both equally good/None/Cannot be determined” are invalid since yields are clearly computable and different.

Common Pitfalls:Comparing only coupon rates and ignoring prices. Always divide by the quoted price to get the true yield.

Final Answer:3 1/2% at 93