Question

Investing in 16% ₹ 100 shares at ₹ 80 or in 20% ₹ 100 shares at ₹ 120.

Assertion (A): It is better to invest in 16% ₹ 100 shares at ₹ 80.

Reason (R): Return % from the shares = `("Income"/"Investment"× 100)%`

विकल्प

• A is true, R is false.

• A is false, R is true.

• Both A and R are true and R is correct reason for A.

• Both A and R are true and R is incorrect reason for A.

Answer 1

Both A and R are true and R is correct reason for A.

Explanation:

Face value of the 1st share = ₹ 100

Dividend rate = 16%

Market value = ₹ 80

Dividend (or income) per share = Dividend rate × face value of each share

= 16% of 100

= `16/100 xx 100`

= ₹ 16

Rate of return = `"Annual income on 1 share"/"Investment on 1 share"​ xx 100`

= `16/80 xx 100`

= 20%

Face value of second share = ₹ 100

Dividend rate = 20%

Market value = ₹ 120

Dividend (or income) per share = Dividend rate × face value of each share 

= 20% of 100 

= `20/100 xx 100`

= ₹ 20

Rate of return = `"Annual income on 1 share​"/"Investment on 1 share" xx 100​`

= `20/120 xx 100`

= 16.66%

The scheme that offers a higher rate of return is considered better. And, rate of return in first scheme is 20% and that of second scheme is 16.66%.

So, Assertion (A) is true.

Rate of return = `"Annual income on 1 share​"/"Investment on 1 share" xx 100​`

= `"Income"/"Investment" xx 100`

The given formula for rate of return is true.

So, Reason (R) is true.

Hence, option 3 is correct.