Question

Which is better investment? 20% stock at 140 (or) 10% stock at 70.

Answer 1

Let the investment in case be Rs 140 x 70 

Income from 20% stock at Rs 140 is 

= \(\frac{20}{140}\) x 140 x 70 

= 20 x 70 

= Rs 1400

Income from 10% stock at 70 = \(\frac{10}{70}\) x 140 x 70 = Rs 1400 

For the same investment both stocks fetch the same income. Therefore they are equivalent shares.