Math : Arithmetic : Shares, Stocks and Debenture Questions, Answers. Ascent MBA TANCET, XAT, CAT, PGSEM Coaching, Study Material

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You are here: Home   CAT, XAT, TANCET Prep Questions  Miscellaneous Topics   Shares & Stocks

Quantitative Reasoning : Shares, Stocks

You could get at most one question from this topic. This is again a topic that is not oft repeated in MBA entrance tests such as CAT, XAT, PGSEM, and TANCET. An easy to master concept. Get clarity about the different terms such as face value, market price, % dividend, %interest, yield or rate of return or return on investment (ROI).

Question

Which amongst the following investments has the lowest return?
  1. 7% Rs.100 shares at Rs.120
  2. 8% Rs.10 shares at 13.50
  3. 9% Rs.50 shares at Rs.54
  1. a only
  2. b only
  3. c only
  4. both 'a' and 'c'

Correct Answer

Choice (1). 7% Rs.100 shares at Rs.120

Explanatory Answer

7% Rs.100 shares at Rs.120 means that the income earned by investing Rs.120 to buy the share = Rs. 7.
Therefore, return = 7/120

8% Rs.10 shares at Rs.13.50 means that the income earned by investing Rs.13.50 on this share is Rs.0.80.
Therefore, return = 8/135

9% Rs.50 shares at Rs.54 means that the income earned by investing Rs.54 on this stock is Rs.4.50.
Therefore, return = 4.5/54 = 10/120

From the available data we know that 4.5/54 = 10/120 (i.e., returns from the 9% Rs.50 share at Rs.54) is a better investment than 7/120 (i.e., returns from a 7% Rs.100 share at Rs.120).

Hence, we need to compare between 7% Rs.100 share at Rs.120 and 8% Rs.10 share at Rs.13.50

7/120 = 63/1080 and 8/135=64/135.

64/1080 is a better investment than 63/1080.

Therefore, the investment with the lowest return is the one given in choice (a).


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