Q.Which is the better investment: 8% shares of face value ₹100 available at ₹80, or 10% shares of face value ₹100 available at ₹120? Compare using the rate of return on a sum of ₹24,000 invested in each.

Find how many shares ₹24,000 buys in each case, then the resulting dividend income and rate of return, and compare.

Option A: $24000/80=300$ shares; income $=300\times100\times0.08=2400$; return $=2400/24000\times100=10\%$. …

Option A — 8% share, face value ₹100, market price ₹80.

Number of shares bought with ₹24,000: $\dfrac{24{,}000}{80} = 300$ shares.

Annual dividend income: $300\times100\times\dfrac{8}{100} = 30{,}000\times0.08=2{,}400$.

Rate of return: $\dfrac{2{,}400}{24{,}000}\times100 = 10\%$.

Option B — 10% share, face value ₹100, market price ₹120.

Number of shares bought with ₹24,000: $\dfrac{24{,}000}{120} = 200$ shares.

Annual dividend income: $200\times100\times\dfrac{10}{100} = 20{,}000\times0.10=2{,}000$.

Rate of return: $\dfrac{2{,}000}{24{,}000}\times100 \approx 8.33\%$.

Comparison. Option A yields ₹2,400 a year for the same ₹24,000 outlay, against ₹2,000 for Option B — Option A is clearly the better investment, despite its lower nominal dividend rate (8% vs 10%), precisely because it is available at a much steeper discount to face value. …

The shortcut in the Independent check — dividing the nominal rate directly by the ratio of market price to face value — always gives the same rate of return as the full fixed-sum method, and is f …

Picking the investment with the higher nominal dividend rate (10% in Option B) without checking the actual price paid is the exact trap this question is designed to expose — the nominal rate alone say …