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Question
Sundar bought ₹ 4,500, 12% of ₹ 10 shares at par. He sold them when the price rose to ₹ 23 and invested the proceeds in ₹ 25 shares paying 10% per annum at ₹ 18. Find the change in his income.
Solution
Number of shares = `4500/10` = 450
Income from 12% stock = Number of shares × face value × Rate of dividend
= 450 × 10 × `12/100`
= ₹ 540
Selling price of 450 shares = 450 × 23 = ₹ 10,350
Number of shares bought in 10% stock = `("Selling price of 450 shares at ₹ 23")/("Market value")`
= `10350/18`
= ₹ 575
Income, from 10% stock = No of shares × face value × Rate of dividend
= 575 × 25 × 10100
= 575 × 104
= ₹ 1437.5
= ₹ 1437.50
Charge in his income = ₹ 1437.50 – ₹ 540 = ₹ 897.50
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