Phenol can form hydrogen bonds with water since it contains O-H group but nitrobenzene can not form hydrogen bonds with water.
Polar molecules tend to be soluble in water. The greater the dipole moment, the greater the polarity of the compound. We can see that Nitrobenzene has a dipole moment of 4.2 x 10-9 esu cm while phenol has a dipole moment of 1.7 x 10-8 esu cm.
Now, It is confusing to observe that the solubility of Nitrobenzene in water is far less than that of phenol despite its higher dipole moment. The reason for this observation is that, phenol can form hydrogen bonds with water since it contains O-H group but nitrobenzene can not form hydrogen bonds with water.
Therefore, phenol is more soluble in pure water as a solvent compared to nitorbenzene.
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