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Stocks and Shares MCQ1 (Shares and investment)

Stocks and Shares MCQ1: A man buys Rs. 25 shares in a company which pays 9% dividend . The money invested is such that it gives 10% on investment. At what price did he buy the shares?

a) Rs.22                     b) Rs.22.50                        c) Rs.25                        d) Rs.22.50

Solution:

 

 

Investment= Rs 25

Dividend payment by the company for the investment= 9%

i-e

\[ Dividend = 25\times\frac{9}{100}=\frac{9}{4} \]

But according to the statement he earns Rs for Rs 100 i-e 10% i-e if (suppose) he invests 100 Rs then he earns  Rs10!

mathematically,

\[ Rs10 Earned for =Rs 100 \]

or

\[ Re1 Earned for\frac{100}{10}=Rs10 \]

But he earned Rs 9/4 from the company for total shares investment in which he bought each share for some unknown price !

That unknown price can be calculated by multiplying 9/4 both sides of above last expression.

i-e

\[ Rs \frac{9}{4} Earned for =\frac{9}{4}\times 10=Rs 22.5 \]

 

So the unkown price of a share is

 

 

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