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A man invests in a 16% stock at 128. The interest obtained by him is:____________?

Correct answer: B. 12.5%

  • A. 16%
  • B. 12.5%
  • C. 8%
  • D. 12%

Explanation

A 16% stock pays Rs. 16 income for every Rs. 100 face value. When purchased at Rs. 128, the return on investment is 16/128 x 100 = 12.5%. The likely trap is 16%, which is the dividend rate on face value, not the actual yield on the purchase price.

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