Question

Ankit had the option of investing in company A, where 7%, ₹ 100 shares are available at ₹ 120 or in company B, where 8%, ₹ 1000 shares are available at ₹ 1620.

Assertion (A): Investment in Company A is better than Company B.

Reason (R): The rate of income in Company A is better than in Company B.

विकल्प

• Both A and R are true and R is the correct explanation.

• Both A and R are true, but R is not the correct explanation.

• A is false, but R is true.

• Both A and R are false.

Answer 1

Both A and R are true and R is the correct explanation.

Explanation:

Company A: Dividend = 7% of ₹ 100 = ₹ 7. 

Investment price = ₹ 120. 

Rate of income = `7/120` = 5.833...%.

Company B: Dividend = 8% of ₹ 1000 = ₹ 80. 

Investment price = ₹ 1620. 

Rate of income = `80/1620` = 4.938...%.

Since 5.833% > 4.938%, investment in Company A yields a higher income, so A is true and R correctly explains it.