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]

Answer:

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]

Answer:

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]

Answer:

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]

Answer:

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]

Answer:

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]

Answer:

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} = 864 \ Rs.  

Hence the change in income = 864-240 = 624 \ 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]

Answer:

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]

Answer:

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]

Answer:

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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