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Question
At what price should a 6.25% Rs. 100 shares be quoted when the money is worth 5%?
Solution
Interest on Rs. 100 worth = Rs. 5
If interest is Rs. 5, then market value = Rs. 100
and if interest is Rs. 6.25, then market value
= `(100)/(5) xx 6.25`
= `(100 xx 625)/(5 xx 100)`
= 125
Market value of each share = Rs. 125.
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