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Question
Find the annual dividend received from Rs. 25000, 8% stock at 108.
Solution
Amount invested = ₹ 25,000
Dividend = 8%
Assuming face value F.V. as ₹ 100
Annual income per share
= `"Dividend"/100 xx "Face value"`
= `8/100 xx 100`
= ₹ 8
The market value of the share M.V. = ₹ 108
∴ Rate of return = `"Annual income per share"/"Market value" xx 100`
Rate of return = `8/108 xx 100 = 7.4%`
Annual dividend on amount invested
= Rate of return × amount invested
= `7.4/100 xx 25,000`
= ₹ 1850
∴ Annual dividend of ₹ 1850 is received from 8% stock at ₹ 108.
Alternate approach
Assuming ₹ 25,000 as the total face value of all the shares. Since the dividend is 8%,
Annual dividend = `8/100 xx 25,000 = ₹ 2,000`
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