Q.Compare the following two investments by yield and state which is the better investment: Company A — face value ₹10, dividend rate 12%, market value ₹15. Company B — face value ₹100, dividend rate 8%, market value ₹80.

Comparing two investments always means comparing their yields, computed on the actual market value paid, never their raw dividend rates.

Company A

Dividend per share $= \dfrac{12}{100}\times10 = ₹1.20$.

Company B

Dividend per share $= \dfrac{8}{100}\times100 = ₹8$.

Comparison: Company A's yield is 8%, Company B's yield is 10%. Even though Company A declares the HIGHER headline dividend rate (12% vs 8%), Company B is the genuinely better investment on the money actually invested, because B's market value is cheaper relative to its dividend income. …

Comparing the two companies by their raw dividend RATES (12% vs 8%) and wrongly concluding A is better, ignoring that the rate is only meaningful relative to face value, not to what was actually invested. Also comparing raw rupee dividend am …