Question

A share of FV ₹ 10 is purchased for MV ₹12. Dividend declare is 18 % . complete the following activity to find the rate of return.
Dividend on share of FV ₹ 10
At 18 % = 18 / 100×_____ ₹ 1.80
MV of the share = ________
Dividend on ₹ 12 = ₹ 1.80
Rate of return = 1.80/ 12 × _____ = _____

Answer 1

Given−

Face value of share = ₹ 10

Market value of share = ₹ 12

Dividend % = 18 %

To Find−

Rate of return

solution_

Given that

Face value of share = ₹ 10

Market value of share = ₹ 12

Dividend % = 18 %

Let number of shares purchased be 'x'.

We know,

:⟼Income = D% × F.V.×number of shares

where,

D % = Dividend %

F. V. = Face Value of 1 share

:⟹Income= 18

$18 \div 100 \times 10 \times x = 18x$

Now,

Investment = Market Value × number of shares

Investment = ₹ 12x

So,

:⟼Rate of return= investment / Income × 100%

:⟼Rate of return= 12x1.8x×100%

$12x1.8x×100%$

:Rate of return= of=15%