Which is better investment 11% stock at 143 or 9 ¾% stock at 117

Question

Accepted Answer

> [!TLDR]
> The key is to compare the **effective yield** (return per rupee invested) of each stock. The 9¾% stock at 117 gives a higher yield (≈ 8.33%) than the 11% stock at 143 (≈ 7.69%), so the **9¾% stock at 117 is the better investment**.

## Why Yield Matters, Not Just the Dividend Rate

When comparing stocks, the dividend percentage (like 11% or 9¾%) is misleading — it’s a percentage of the **face value** (usually ₹100), not of the price you actually pay. What you care about is: *for every ₹100 I invest, how much do I earn?* That’s the **yield**.

> [!FORMULA]
> $$ 	ext{Yield} = \frac{	ext{Annual dividend per share}}{	ext{Market price per share}} 	imes 100\% $$

The face value of a stock is typically ₹100 unless stated otherwise. So “11% stock” means ₹11 dividend per year on a ₹100 face-value share, but you buy it at ₹143. Similarly, “9¾% stock” means ₹9.75 dividend per year, bought at ₹117.

---

## Step-by-Step Comparison

**1. Calculate the annual dividend for each stock**

- For the 11% stock: dividend = 11% of ₹100 = ₹11 per share.
- For the 9¾% stock: dividend = 9.75% of ₹100 = ₹9.75 per share.

**2. Compute the yield for the 11% stock at 143**

You pay ₹143 to get ₹11 per year.

$$ 	ext{Yield}_1 = \frac{11}{143} 	imes 100\% = \frac{1100}{143}\% $$

Simplify: $143 	imes 7 = 1001$, so $1100 \div 143 \approx 7.6923\%$.

> [!TIP]
> A quick check: $11/143 = 1/13 \approx 0.07692$, so yield ≈ 7.69%. That’s a clean fraction — useful for mental math.

**3. Compute the yield for the 9¾% stock at 117**

You pay ₹117 to get ₹9.75 per year.

$$ 	ext{Yield}_2 = \frac{9.75}{117} 	imes 100\% = \frac{975}{117}\% $$

Simplify: divide numerator and denominator by 3: $975 \div 3 = 325$, $117 \div 3 = 39$. So $\frac{325}{39}\%$.

Now $39 	imes 8 = 312$, remainder 13, so $325/39 = 8.3333...\%$. …

Q.Which is better investment 11% stock at 143 or 9 ¾% stock at 117

Concept understanding — Stock Valuation

Bond Valuation: The Intuition First

The Precise Statement

Why This Works: The Logic

A Worked Example

Why Yield Matters, Not Just the Dividend Rate

Step-by-Step Comparison

Q.Which is better investment 11% stock at 143 or 9 ¾% stock at 117

Why Yield Matters, Not Just the Dividend Rate

Step-by-Step Comparison

🎓Unlock everything free for 14 days

Unlock everything free for 14 days