Which of the following is a better investment ?
(A) 10%, Rs. 100 shares at Rs. 120.
(B) 9%, Rs. 100 shares at Rs. 110.

Options

A. A
B. B
C. Both (A) and (B)
D. Data insufficient

Answer

To determine which investment is better between the two options given, we need to calculate the rate of return for each investment. The rate of return can be calculated using the formula:

\[ \text{Rate of Return (ROR)} = \frac{\text{Dividend}}{\text{Market Value}} \times 100 \]

Where:
- Dividend = Face Value × Rate of Dividend

### Step 1: Calculate the Rate of Return for Investment A
- **Investment A**: 10% dividend on Rs. 100 shares at Rs. 120

1. **Face Value (FV)** = Rs. 100
2. **Rate of Dividend (RD)** = 10% = 0.10
3. **Market Value (MV)** = Rs. 120

**Calculate the Dividend**:
\[ \text{Dividend} = \text{Face Value} \times \text{Rate of Dividend} = 100 \times 0.10 = Rs. 10 \]

**Calculate the Rate of Return**:
\[ \text{ROR} = \frac{\text{Dividend}}{\text{Market Value}} \times 100 = \frac{10}{120} \times 100 \]
\[ \text{ROR} = \frac{1000}{120} = 8.33\% \]

### Step 2: Calculate the Rate of Return for Investment B
- **Investment B**: 9% dividend on Rs. 100 shares at Rs. 110

1. **Face Value (FV)** = Rs. 100
2. **Rate of Dividend (RD)** = 9% = 0.09
3. **Market Value (MV)** = Rs. 110

**Calculate the Dividend**:
\[ \text{Dividend} = \text{Face Value} \times \text{Rate of Dividend} = 100 \times 0.09 = Rs. 9 \]

**Calculate the Rate of Return**:
\[ \text{ROR} = \frac{\text{Dividend}}{\text{Market Value}} \times 100 = \frac{9}{110} \times 100 \]
\[ \text{ROR} = \frac{900}{110} \approx 8.18\% \]

### Step 3: Compare the Rates of Return
- Rate of Return for Investment A = 8.33%
- Rate of Return for Investment B = 8.18%

Since 8.33% (Investment A) is greater than 8.18% (Investment B), **Investment A is the better investment**.

### Conclusion
The better investment is **Investment A**.

---