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Question
A man buys 400, twenty-rupee shares at a premium of Rs. 4 each and receives a dividend of 12%. Find:
- the amount invested by him.
- his total income from the shares.
- percentage return on his money.
Solution
Nominal value of 1 share = Rs. 20
Market value of 1 share = Rs. 20 + Rs. 4 = Rs. 24
No. of shares purchased = 400
Nominal value of 400 shares = 400 × 20 = Rs. 8,000
1. Market value of 400 shares = 400 × 24 = Rs. 9,600
2. Dividend% = 12%
Dividend = 12% of Rs. 8000
= `12/100 xx Rs. 8000`
= Rs. 960
3. Percentage return = `"Income"/"Investment" xx 100%`
= `960/9600 xx 100%`
= 10%
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