Discussion
A 6% stock yields 8%. The market value of the stock is
Answer: B
In stock problems, a "\( r\% \) stock at \( m \)" means Rs. 100 of face value costs Rs. \( m \) and pays Rs. \( r \) a year, so the yield on money invested is \( \tfrac{r}{m} \).
\[ \text{yield} = \frac{6}{m} = 8\% \]
\[ m = \frac{6}{0.08} = \text{Rs. } 75 \]
A yield above the dividend rate means the stock trades below par.
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