Question:Which is better investment ? `7 1/2%` stock at 105 or `6 1/2%` stock at 94.
Answer Let the investing in each case be Rs.`(105 xx 94).` Case I : `7 1/2%` stock at 105 : On investing Rs. 105, income` = Rs. 15/2` On investing Rs. `(105 xx 94),` income `= Rs. (15/2 xx 1/105 xx 105 xx 94)` `= Rs. 705.` Case II :` 6 1/2%` stock at 94 : On investing Rs. 94, income` = Rs. 13/2` On investing Rs.`( 105 xx 94)`, income `= Rs. (13/2 xx 1/94 xx 105 xx 94)` `= Rs. (1365)/2` `= Rs. 682.50.` Clearly, the income from` 7 1/2%` stock at 105 is more. Hence, the investment in` 7 1/2%` stock at 105 is better.
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Which is better investment ? `7 1/2%` stock at 105 or `6 1/2%` stock at 94.