Stocks & Shares Questions and Answers

Answer: B

Ram can finish a puzzle in 3 hours. Shyam can finish the puzzle in 2 hours.
=>In one hour Ram can finish 1/3rd of a puzzle
=>In one hour Shyam can finish half the puzzle
A total of 15 candies are to be shared amongst both of them
Hence Ram’s share must be = ((Work done by Ram in 1 hour)/(Work done by Shyam in one hour)+(Work done by Ram in hour))*15
=> 1/3/((1/2)+(1/3))*15
=> (1/3/(5/6))*15
=> 6/15*(15)
=>6 candies

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

\[ \frac{6}{m} = 10\% \quad\Longrightarrow\quad m = \frac{6}{0.10} = \text{Rs. } 60 \]

The yield exceeds the dividend rate, so the stock must be quoted below par.

Answer: C

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

\[ \text{yield} = \frac{15}{50} = 30\% \]

\[ \text{investment} = \frac{\text{income}}{\text{yield}} = \frac{2000}{0.30} \]

\[ = \text{Rs. } 6666.67 \]

Equivalently, every Rs. 50 invested earns Rs. 15, so \( 2000 \times \tfrac{50}{15} = 6666.67 \).

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

\[ \text{9\% at 75 yields } \frac{9}{75} = 12\%, \qquad \text{10\% at 80 yields } \frac{10}{80} = 12.5\% \]

Equal incomes from the two parts:

\[ 0.12x = 0.125(9800 - x) \]

\[ 0.12x = 1225 - 0.125x \quad\Longrightarrow\quad 0.245x = 1225 \]

\[ x = \text{Rs. } 5000 \]

Each part then yields Rs. 600.

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: B

The dividend is 9% of the Rs. 20 face value:

\[ 0.09 \times 20 = \text{Rs. } 1.80 \text{ per share} \]

For that to be 12% of the price paid:

\[ \text{market value} = \frac{1.80}{0.12} = \text{Rs. } 15 \]

To earn a higher yield than the dividend rate, the share must be bought below par - which is why the answer is under Rs. 20.

Answer: C

Correct answer: Rs. 400

\[\text{Face value bought} = \frac{4500}{90} \times 100 = \text{Rs. } 5000\]

\[\text{Income} = \frac{8}{100} \times 5000 = \text{Rs. } 400\]

Buying below par is what makes the effective yield, \(\tfrac{400}{4500}\), higher than the 8% nominal rate.

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: 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: 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.