Chapter: Financial Planning· Mathematics Part 1 (Algebra)

(Thinking question) Company A offers shares of FV ₹ 100 at MV ₹ 120 and pays 9% dividend. Company B offers shares of FV ₹ 10 at MV ₹ 15 and pays 12% dividend. Which investment gives a better rate of return? Show your working.

Q.20 (Thinking question) Company A offers shares of FV ₹ 100 at MV ₹ 120 and pays 9% dividend. Company B offers shares of FV ₹ 10 at MV ₹ 15 and pays 12% dividend. Which investment gives a better rate of return? Show your working.

Doubtly Asked 29 Oct 2026 Practice test ssc 10th Save WhatsApp Report

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Answer: Company B is better (8% return against 7.5%).

Company A: dividend per share = \(\dfrac{9}{100} \times 100\) = ₹ 9

Rate of return = \(\dfrac{9}{120} \times 100 = 7.5\%\)

Company B: dividend per share = \(\dfrac{12}{100} \times 10\) = ₹ 1.20

Rate of return = \(\dfrac{1.20}{15} \times 100 = 8\%\)

Since \(8\% \gt 7.5\%\), shares of Company B give the better return. A higher dividend rate alone does not decide this; the rate of return depends on the price (MV) paid.

Doubtly AI · 29 Oct 2026 AI-verified · Nov 2026 Report

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(Thinking question) Company A offers shares of FV ₹ 100 at MV ₹ 120 and pays 9% dividend. Company B offers shares of FV ₹ 10 at MV ₹ 15 and pays 12% dividend. Which investment gives a better rate of return? Show your working.

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