Discussion

What income is obtained by investing Rs. 3000 in 9% stock at 120 ?

Answer: B

Correct answer: Rs. 225

Each Rs. 100 of stock costs Rs. 120 and pays Rs. 9.

\[\text{Stock bought} = \frac{3000}{120} \times 100 = \text{Rs. } 2500 \text{ face value}\]

\[\text{Income} = \frac{9}{100} \times 2500 = \text{Rs. } 225\]

The dividend is always reckoned on the face value, never on the price paid.

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