if you have 50000 for investment purposes would you like to invest in equity shares, preference shares, public deposits or debentures? justify your answer
Dear Student,
Investment in security basically depends on various factors but two main factors are the rate of return and cost of investment. In other words, an investor needs to think that the rate of return is more than its cost.
In this case, earning per share for each investment will be calculated and which security has the highest earning per share should be chosen for investment purpose.
Also, it is safe to invest Rs.50000 in debenture because interest payable on debenture is tax saving and this will help in saving tax whereas dividend payable on equity and preference share is not tax saving.
Hence investment should be done in the debenture.
Regards,
Investment in security basically depends on various factors but two main factors are the rate of return and cost of investment. In other words, an investor needs to think that the rate of return is more than its cost.
In this case, earning per share for each investment will be calculated and which security has the highest earning per share should be chosen for investment purpose.
Also, it is safe to invest Rs.50000 in debenture because interest payable on debenture is tax saving and this will help in saving tax whereas dividend payable on equity and preference share is not tax saving.
Hence investment should be done in the debenture.
Regards,