Question

1. How much should a man invest in 100
shares selling at 110 to obtain an annual
income of 1,680, if the dividend declared is
12% ?​

Answer 1

Nominal value of 1 share = Rs 100

Market value of 1 share = Rs 110

Let no. of shares purchased = n

Then nominal value of n shares = Rs (100n)

Dividend% = 12%

Dividend = Rs 1,680

∴ 12% of 100n = Rs 1680

12/100×100n=Rs 1680

N= 1680×100/12×100 = 140

Then market value of 140 shares=

140×110= 15400 Rs.