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.

Options

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

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

• A is true, but R is false.

• A is false, but R is true.

Answer 1

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

Explanation:

Step 1 – Assertion: A is true. Company A gives a higher return on the amount invested.

Step 2 – Reason: R is true. The rates of return are:

$$\text{Return from Company A} = \frac{7}{120} \times 100 \approx 5.83%$$

$$\text{Return from Company B} = \frac{80}{1620} \times 100 \approx 4.94%$$

Step 3 – Link: Company A has the higher rate of income on investment, so R correctly explains why it is the better investment.