NumericalModerate3 marks
How much should a man invest in Rs. 50 shares selling at Rs. 60 to obtain an income of Rs. 450, if the rate of dividend declared is 10%. Also find his yield percent, to the nearest whole number.
Topic: Shares, dividend and return
Previous-year question practice database
Answer
Exam answer
Nominal value = ₹50. Dividend rate = 10%.
Dividend per share = 10% of 50 = ₹5.
Required income = ₹450.
Number of shares = 450/5 = 90.
Market price = ₹60.
Investment = 90 × 60 = ₹5,400.
Yield = 450/5400 × 100 = 8.33% ≈ 8%.
Answer: Investment = ₹5,400; Yield = 8%.
Explanation
Dividend is based on nominal value; investment is based on market price. Yield = income/investment ×100.
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