A invested some money in 10% stock at 96. If B wants to invest in an equally good 12% stock, he must purchase a stock worth of__________?
Correct answer: B. Rs. 115.20
- A. Rs. 80
- B. Rs. 115.20
- C. Rs. 120
- D. Rs. 125.40
Explanation
The 10% stock at Rs. 96 gives a yield of 10/96 per rupee invested. If the 12% stock is equally good and its price is P, then 12/P = 10/96, so P = (12 x Rs. 96) ÷ 10 = Rs. 115.20. The likely mistake is option c, Rs. 120, which compares the face values without matching the investment yields.
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