Question 1: A man invests Rs. 8,800 in buying shares of a company of face value of Rs. 100 each at a premium of 10%. If he ears Rs. 1,200 at the end of the year as dividend. Find; i) The number of shares he has in the company. ii) The dividend percent per share.   [2001]

Nominal price of the share $100 \ Rs.$.

Cost price of the share $= 100 +10 = 110 \ Rs.$.

Number of shares bought $=\frac{8800}{110} = 80$

Dividend earned $= 1200 \ Rs.$

Let the dividend % $= x$. Therefore

$80 \times 100 \times \frac{x}{100} = 1200 \Rightarrow x = 15\%$

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Question 2: A man invests Rs. 1680 in buying shares of nominal value Rs. 24 and selling at 12% premium. The dividend on the shares is 15% per annum. Calculate: i) The number of shares he buys; ii) The dividend he receives.    [1999]

Nominal price of the share $24 \ Rs.$.

Selling price of the share $= 24 +24 \times \frac{12}{100} = 26.88 \ Rs.$.

Number of shares bought $= \frac{1680}{26.88} = 62.5$

Dividend received $= 62.5 \times 24 \times \frac{15}{100} = 225 \ Rs.$.

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Question 3: By investing Rs. 7500 in a company paying 10% dividend, an annual income of Rs. 500 is received. What price is paid for each of Rs.100 shares?    [1990]

Let the premium $= x \ Rs.$

Market price $= (100+x) \ Rs.$

Therefore

$\frac{7500}{(100+x)} \times 100 \times {10}{100} = 500$

$750 = 500+5x$

$x = 50$

Hence the price paid for each share $= 100+50 = 150 \ Rs.$

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Question 4: A man invests Rs. 20,020 in buying shares of N.V. Rs. 26 at 10% premium. The dividend on the shares is 15% per annum. Calculate: i) The number of shares he buys; ii) The dividend he receives annually; iii) The rate of interest he gets on his money.    [2012]

Number of shares $= \frac{20020}{26+2.6} = 700$

Dividend $= 700 \times 26 \times \frac{15}{100} = 2730 \ Rs.$

% rate of interest he gets $= \frac{2730}{20020} \times 100 = 13.64\%$

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Question 5: A man invested Rs. 45,000 in 15% Rs.100 shares quoted at Rs. 125, when the M.V. of these shares rose to Rs. 140, he sold some shares, just enough to raise Rs. 8400. calculate: i) The number of shares he still holds; ii) The dividend due to him on these remaining shares.    [2004]

Nominal Value of the share $= 100 \ Rs.$

Market Value of the share $= 125 \ Rs.$

Number of shares bought $= \frac{45000}{125} = 360$

Selling Value of the share $= 140 \ Rs.$

Amount of money raised $= 8400 \ Rs.$

Therefore number of shares sold $= \frac{8400}{140} = 60$

Shares left $= 360 - 60 = 300$

Dividend earned  on remaining shares $= 300 \times 100 \times \frac{15}{100} = 4500 \ Rs.$

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Question 6: Vivek invests Rs. 4,500 in 8%, Rs.10 shares at Rs. 15. He sells the shares when the price rises to Rs. 30, and invests the proceeds in 12% Rs. 100 shares at Rs. 125. Calculate; i) The sale proceeds  ii) The number of Rs. 125 shares he buys;  iii) The change in his annual income from dividend.     [2010]

First Investment

Let the amount invested $= 4500 \ Rs.$

Nominal Value of the share $= 10 \ Rs.$

Market Value of the share $= 15 \ Rs.$

Dividend earned $= 8\%$

Number of shares bought $= \frac{4500}{15} = 300$

Sale Proceed $= 300 \times 30 = 9000 \ Rs.$

Dividend earned $= 300 \times 10 \times \frac{8}{100} = 240 \ Rs.$

Second Investment

Therefore  the amount invested $= 9000 \ Rs.$

Nominal Value of the share $= 100 \ Rs.$

Market Value of the share $= 125 \ Rs.$

Dividend earned $= 12\%$

Number of shares bought $= \frac{9000}{125} = 72$

Dividend earned $= 72 \times 100 \times \frac{12}{100} = 720 \ Rs.$

Hence the change in income $= 720-240 = 480 \ Rs.$

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Question 7: Mr. Parekh invested Rs. 52,000 on Rs. 100 shares at a discount of Rs. 20 paying 8% dividend. At the end of one year he sells the shares at a premium of Rs. 20; find: i) The annual dividend;  ii) The profit earned including his dividend.     [2011]

Nominal Value of the share $= 100 \ Rs.$

Market Value of the share $= 80 \ Rs.$

Number of shares bought $= \frac{52000}{80} = 650$

Dividend earned $= 650 \times 100 \times \frac{8}{100} = 5200 \ Rs.$

Sale proceeds $= 650 \times 120 = 78000 \ Rs.$

Profit $= (78000-52000)+5200 = 31200 \ Rs.$

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Question 8: Salman buys 50 shares of face value Rs. 100 available at Rs. 132. i) What is his investment?  ii) If the dividend is 7.5%, what will be his annual income? iii) If he wants to increase his annual income by Rs. 150, how many extra shares should he buy?     [2013]

Nominal Value of the share $= 100 \ Rs.$

Market Value of the share $= 132 \ Rs.$

Number of shares bought $= 50$

Investment $= 50 \times 132 = 6600 \ Rs.$

Dividend earned $= 50 \times 100 \times \frac{7.5}{100} = 375 \ Rs.$

Dividend earned on 1 share $= 1 \times 100 \times \frac{7.5}{100} = 7.5 \ Rs.$

Therefore to earn 150 Rs. more, one needs to buy $\frac{150}{7.5} = 20$ shares.

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Question 9: Salman invests a sum of money in Rs. 50 shares, paying 15% dividend quoted at 20% premium. If his annual dividend is Rs. 600, Calculate; i) The number of shares he bought; ii) His total investment;  ii) The rate of return on his investment.     [2004]

Nominal Value of the share $= 50 \ Rs.$

Market Value of the share $= 60 \ Rs.$

Dividend earned $= 15\%$

Dividend earned on 1 share $= 1 \times 50 \times \frac{15}{100} = 7.5 \ Rs.$

Number of shares bought $= \frac{600}{7.5} = 80$

Investment $= 80 \times 60 = 4800 \ Rs.$

$\% \ return = \frac{600}{4800} \times 100 = 12.5\%$

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