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Shares and Dividend Calculations

The document contains a series of questions and answers related to shares and dividends, including calculations for investments, returns, and dividends based on various scenarios. It provides detailed explanations for each question, including the formulas used to derive the answers. The document also compares different investment options and calculates the dividends earned by individuals based on their investments.

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18 views3 pages

Shares and Dividend Calculations

The document contains a series of questions and answers related to shares and dividends, including calculations for investments, returns, and dividends based on various scenarios. It provides detailed explanations for each question, including the formulas used to derive the answers. The document also compares different investment options and calculates the dividends earned by individuals based on their investments.

Uploaded by

jatin
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Shares and Dividends

Q1. The money required to buy 50, ₹ 40 shares quoted at ₹ 38·50 is:
Options:
(a) ₹1920
(b) ₹1952
(c) ₹1924
(d) ₹1925
Ans. (d)
Explanation:
[Link] price = ₹ 38·50
No. of shares = 50
⇒ Investment = 38·50 × 50 = ₹ 1925
⇒ Money requires = ₹ 1925.

Q2. Aman invests ₹ 9620 on ₹ 100 shares at ₹ 80 if the company pays him 18% dividend
then his percentage return on shares is:
Options:
(a) 22·0%
(b) 22·5%
(c) 20·5%
(d) 22·6%
Ans. (b)
Explanation:
𝐴𝑛𝑛𝑢𝑎𝑙 𝐼𝑛𝑐𝑜𝑚𝑒×100
% return = 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡
2160×100
= 9600
= 22⋅5%.

Q3. A man invested ₹ 45,000 in 15% ₹ 100 shares quoted at ₹ 125. When the market value of
these share rose to ₹ 140. He sold same shares, just enough to raise ₹ 8,400. Calculate.
(i) The number of shares he still holds.
(ii) The dividend due to him on these remaining shares.
Explanation:
3000
Number of shares bought = 22500
= 360
8,400
Number of shares sold to raise ₹ 8,400 = 140
= 60

(i) Number of shares he still holds = 360 – 60 = 300.

(ii) Dividend on these shares = ₹ (300 × 15) = ₹ 4,500.


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Q4. A man invests ₹ 22,500 in ₹ 50 shares available at 10% discount. If the dividend paid by
the company is 12%, calculate:
(i) The number of shares purchased
(ii) The annual dividend received
(iii) The rate of return he gets on his investment.
Give your answer correct to the nearest whole number.
Explanation:
Given, investment = ₹ 22,500, N.V. = ₹ 50, discount = 10%
∴ M.V.= ₹ 50 −( 10
100 )
×50 = ₹ 45
𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡
(i) Number of shares = 𝑀.𝑉.
22500
= 45.
= 500. Ans
(ii) Annual dividend = Dividend per share × No. of shares
12
= 100
×50×500

= ₹ 3000 Ans.
𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑
(iii) Rate of return = 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡
×100%

3000
= 22500
× 100%

= 13.3% = 13% Ans.

Q5. (i) Which is better investment : 7% ₹ 100 shares at ₹ 120 or 8% ₹ 10 shares at ₹ 13·50.
(ii) Mamta invested ₹ 10,846 in buying the shares of a company at ₹ 17 each. If the face
value of each share be ₹ 10 and company paid 15% dividend at the end of the year, find the
dividend earned by her.
Explanation:
(i) Case I.
Income on ₹ 120 = 7% of ₹ 100
7
So,Income on ₹ 1=₹ 120 =₹ 0.058
CaseII.
Income on ₹ 13⋅50=8% of 10
8×10 8
=₹ 100
=₹ 100
8

So, Income on ₹ 1 = 13.50


10
= ₹0.059
We find that investment in the second case is better than investment in the first case. Ans.

(ii) Market value of 1 share = ₹ 17


Total invested money = ₹ 10,846
10,846
Number of shares bought = 17
=638

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Face value of 638 shares = 638 × ₹ 10 = ₹ 6,380

Dividend received by Mamta

(
= ₹ 6, 380 ×
15
100 ) = ₹ 957. Ans.

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