Answer :
Final answer:
The 9.75% stock at 117 is the better investment as it has a higher yield of 8.33% compared to the 11% stock at 143, which has a yield of 7.69%. So, the correct option is B. 9.75% stock at 117.
Explanation:
When comparing two different stock investments, it is important to look at the income they provide relative to their cost. In this case, we have an 11% stock at a price of 143 and a 9.75% stock at a price of 117. To determine which is the better investment, we need to calculate the yield of each stock, which is the annual income (dividend) divided by the purchase price. For the 11% stock at 143:
- Yield = (11 / 143) × 100 = 7.69%
- For the 9.75% stock at 117:
- Yield = (9.75 / 117) × 100 = 8.33%
Comparing the two yields, we can see that the 9.75% stock at 117 has a higher yield than the 11% stock at 143. Therefore, the 9.75% stock is the better investment based on yield alone. It offers a higher return on investment, which is what most investors seek.
