Mathematics
Two men A and B have a choice to buy ₹ 100 shares. A buys shares at ₹ 120 per share and 5% dividend. B buys shares at ₹ 150 per share and 8% dividend. Which of the two men A and B gets the better return, if the nominal value of both the shares is ₹ 100?
A
B
both get equal returns
cannot say
Shares & Dividends
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Answer
For A,
M.V. of share = ₹ 120
N.V. of share = ₹ 100
Dividend = 5%
Income on ₹ 120 = 5% of ₹ 100 = = ₹ 5.
Income on ₹ 1 = = ₹ 0.042
For B,
M.V. of share = ₹ 150
N.V. of share = ₹ 100
Dividend = 8%
Income on ₹ 150 = 8% of ₹ 100 = = ₹ 8.
Income on ₹ 1 = = ₹ 0.053
∴ B gets a better return.
Hence, Option 2 is the correct option.
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