Stocks & Shares Questions and Answers

Answer: D

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 \( \tfrac{r}{m} \).

\[ \text{9\% at 96 yields } \frac{9}{96} = \frac{3}{32}, \qquad \text{12\% at 120 yields } \frac{12}{120} = \frac{1}{10} \]

Equal dividends:

\[ x \times \frac{3}{32} = y \times \frac{1}{10} \quad\Longrightarrow\quad \frac{x}{y} = \frac{32}{30} = \frac{16}{15} \]

The investments are in the inverse ratio of the yields, so the lower-yielding stock takes the larger sum.

Answer: B

\[ \text{yield} = \frac{135}{1620} = \frac{1}{12} = 8.33\% \]

\[ \text{market value} = \frac{8}{1/12} = \text{Rs. } 96 \]

Equivalently, Rs. 1620 buys \( \tfrac{135}{8} \times 100 = 1687.5 \) of face value, and \( \tfrac{1620}{1687.5} \times 100 = 96 \).

Answer: B

Rs. 1552 invested at Rs. 97 per Rs. 100 of face value buys

\[ \frac{1552}{97} \times 100 = \text{Rs. } 1600 \text{ of stock} \]

\[ \text{dividend rate} = \frac{128}{1600} = 8\% \]

The dividend is a percentage of the Rs. 1600 face value, not of the Rs. 1552 invested - that would give 8.25%.

Answer: D

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 \( \tfrac{r}{m} \).

\[ \frac{12}{m} = 10\% \quad\Longrightarrow\quad m = \frac{12}{0.10} = \text{Rs. } 120 \]

A yield below the dividend rate means the stock trades above par - which rules out the Rs. 83.33 option at once.

Answer: A

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 \( \tfrac{r}{m} \).

\[ \text{12\% at 120 yields } 10\%, \qquad \text{15\% at 125 yields } 12\% \]

\[ 0.10x + 0.12(12000 - x) = 1360 \]

\[ 0.10x + 1440 - 0.12x = 1360 \quad\Longrightarrow\quad -0.02x = -80 \]

\[ x = \text{Rs. } 4000 \]

Checking: Rs. 400 from the first stock and Rs. 960 from the Rs. 8000 in the second.

Answer: B

Correct answer: 12% stock at 120

Compare the return on each Rs. 100 actually invested.

\[\frac{12}{120} \times 100 = 10\%, \qquad \frac{8}{90} \times 100 = 8.89\%\]

The first yields more per rupee invested, so the 12% stock at 120 is the better buy despite its higher price.

Answer: D

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 \( \tfrac{r}{m} \).

\[ \frac{12}{m} = 10\% \quad\Longrightarrow\quad m = \frac{12}{0.10} = \text{Rs. } 120 \]

A yield below the dividend rate means the stock trades above par - which rules out the Rs. 83.33 option at once.

Answer: C

\[ \text{yield} = \frac{756}{9000} = 8.4\% \]

The price paid per Rs. 100 of stock, brokerage included, is

\[ \frac{10.5}{0.084} = \text{Rs. } 125 \]

Brokerage of \( \tfrac{1}{4}\% \) is part of that outlay, so the market value itself is

\[ 125 - 0.25 = \text{Rs. } 124.75 \]

Brokerage is added to the price when buying, so it must be stripped out to recover the quoted market value.

Answer: A

Correct answer: Rs. 120

An income of Rs. 800 at Rs. 10 per Rs. 100 of stock means the face value held is

\[\frac{800}{10} \times 100 = \text{Rs. } 8000\]

Rs. 9600 was paid for Rs. 8000 of stock, so each Rs. 100 cost

\[\frac{9600}{8000} \times 100 = \text{Rs. } 120\]

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.