Which of the following is the least attractive scheme?

Options

A. `5%` of Rs.120 shares at Rs.150.
B. `6%` Rs.105 shares at Rs.140.
C. `7%` Rs.105 shares at Rs.125.
D. `8%` Rs.80 shares at Rs.108.

Explanation

Case 1: Face value/share = Rs.120
Dividend rate `=5%`
Annual income/share`=(5)/(100)("Rs.120")="Rs.6"`
Market value/share = Rs.150
Rate of return `=(6)/(150)(100)=4%`
In a similar manner, the rates for the remaining choices can be worked out.
Choice 2: Annual income/share = Rs.6.30
Rate of return `=(6.3)/(14)(100)=(9)/(2)%`.
Choice 3: Annual income/share = Rs.6.30
Rate of return `=(6.3)/(125)(100)=5.04%`.
Choice 4: Annual income/share = Rs.6.40
Rate of return `=(6.4)/(108)(100)=5(25)/(27)%`.
The least attractive scheme is the sheme giving minimum rate of return.
`therefore` Choice (a) gives the minimum rate of return among all the choice.