Stocks & Shares Questions and Answers

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: C

Brokerage is added to the market price when buying.

\[ \text{cost per share} = 20 + 2.5\% \text{ of } 20 = 20 + 0.50 = \text{Rs. } 20.50 \]

\[ n = \frac{8200}{20.50} = 400 \]

Ignoring the brokerage would give 410 - exactly the adjacent option.

Answer: B

The dividend is a percentage of the face value.

\[ \text{income} = 12.5\% \text{ of } 50 = \text{Rs. } 6.25 \]

The investor wants that to be 25% of what was paid:

\[ \text{price} = \frac{6.25}{0.25} = \text{Rs. } 25 \]

Dividend is reckoned on face value, yield on market value - keeping the two apart is the whole of this topic.

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: B

Given market value = Rs 96
Required income = Rs 650
We assume the face value to be Rs 100.
To obtain 10% of face value, investment had to be Rs 96. So, in order to receive Rs 650, required investment is:
9.6*650=6240
Thus the investment should be Rs 6240.

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

\[ \text{yield} = \frac{10}{96} \]

\[ \text{investment} = 650 \times \frac{96}{10} = \text{Rs. } 6240 \]

Each Rs. 96 invested returns Rs. 10, so the investment is the income scaled by \( \tfrac{96}{10} \).

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: 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.

Answer: C

Find how many shares Rs. 4455 buys at Rs. 8.25 each.

\[ n = \frac{4455}{8.25} = 540 \text{ shares} \]

Each Rs. 10 share pays a 12% dividend:

\[ 0.12 \times 10 = \text{Rs. } 1.20 \text{ per share} \]

\[ 540 \times 1.20 = \text{Rs. } 648 \]

The dividend rides on the Rs. 10 face value, not on the Rs. 8.25 paid.

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.