Question

Abishek bought 250 shares of face value ₹20, at the market price of ₹45 each. If the company declared a

dividend of 40% on the share, what will he get, per share, and on the entire investment? Also find the rate

of return​

Answer 1

Answer:

Per share dividend = Rs.8; Total dividend = Rs.2000; Rate of return = 17.8%

Step-by-step explanation:

Face value = FV = Rs.20 per share

Market price = MP = Rs.45 per share

Dividend rate = 40%

Now, dividend is paid on face value. Thus:

Dividend per share = 40% of 20

                                 = 0.40 * 20

                                 = 8

Dividend received per share = Rs.8

Total number of shares = 250

Therefore, total dividend earned = No. of shares * Dividend per share

                                                       = 250 * 8

                                                       = 2000

Total dividend earned on portfolio = Rs.2,000

Total investment = No of shares * Market Price

                             = 250 * 45

                              = 11,250

Total investment in portfolio = Rs.11,250

Rate of return (yield)       = (Total return / Total investment ) * 100%

                                         = (2000/ 11250) * 100 %

                                         = 17.8 %