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Question
A man buys 400 of ₹ 10 shares at a premium of ₹ 2.50 on each share. If the rate of dividend is 12%, then find
- his investment
- annual dividend received by him
- rate of interest received by him on his money
Solution
i. Given Number of shares = 400
Face value of a share ₹ 10 market values of a share = 10 + 2.50 = ₹ 12.50
Investment = Number of shares × Market value of a share
= ₹ 400 × 12.50
= ₹ 5000
ii. Annual dividend = Number of shares × Face value × Rate of dividend
= 400 × 10 × 12100
= ₹ 480
iii. Rate of dividend = `"Dividend"/"Investment" xx 100`
= `480/5000 xx 100`
= `48/5`
= 9.6%
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