Stocks and Shares
- 12500 shares, of par value $ 20 each, are purchased from Ram by Mohan at a price of $ 25 each. Find out the amount required to purchase the shares. If Mohan further sells the shares at a premium of $ 11 each, then find out his gain in the transaction.
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Market value of a share = $ 25
Number of shares = 12500
∴ Market value of 12500 shares = Number of shares x Market value of a share
Market value of 12500 shares = $ (25 × 12500) = $ 312500
Thus, the amount required to purchase 12500 shares = $ 312500
Then, Mohan sells these shares at a premium of $ 11 each.Correct Option: A
Given :- Face value of each share = $ 20
Market value of a share = $ 25
Number of shares = 12500
∴ Market value of 12500 shares = Number of shares x Market value of a share
Market value of 12500 shares = $ (25 × 12500) = $ 312500
Thus, the amount required to purchase 12500 shares = $ 312500
Then, Mohan sells these shares at a premium of $ 11 each.
∴ New market rate per shares = Face value of each share + premium
New market rate per shares = $ (20 + 11) = $ 31
∴ Selling price of these shares = New market rate per shares x Number of shares
Selling price of these shares = $ (31 × 12500) = $ 387500
∴ Gain = S.P. - C.P. = $ (387500 - 312500) = $ 75000.
- A company has issued 10000 preferred shares and 50000 common shares both of par value $ 100 each. The dividend on a preferred share and a common share is 12% and 17.6%, respectively. The company had a total profit of $ 15 Millions, out of which some amount was kept in reserve fund and the remaining distributed as dividend. Find out the amount kept in reserve fund.
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Required Amount kept in reserve fund = Total profit - Total dividend paid
Correct Option: A
Given that :- Face value of each share = $ 100
Number of preferred shares = 10000
Total number of preferred shares = Number of preferred shares x Face value of each share
= 10000 x 100 = 1000000
Number of common shares = 50000
Total number of common shares = Number of common shares x Face value of each share
= 50000 x 100 = 5000000
Total profit = $ 15 Millions
∴ Dividend on 1000000 preferred share
= 12% of $ 1000000= $ 
12 x 1000000 
= $ 120000 100
Dividend on 5000000 common shares = 17.6% of $ 5000000= $ 17.6 x 5000000 = $ 880000 100
∴ Total dividend paid = Dividend on preferred shares + Dividend on common shares
= $ (120000 + 880000)
= $ 1000000 = $ 10 Million
∴ Amount kept in reserve fund = Total profit - Total dividend paid
= $ 15 Million - 10 Million= $ 5 Million.
- Find out the investment required to get an income of $ 1938 from 91/2% stock at 90 (Brokerage 1%).
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Brokerage = 1% $ 90 = $ 0.90
∴ Investment needed to buy $ 100 stock
= $ 90.90 on which the income is $ 9%
For income of $ 91/2 , the investment = $ 90.90Correct Option: C
Given that :- Brokerage = 1% $ 90 = $ 0.90
∴ Investment needed to buy $ 100 stock
= $ 90.90 on which the income is $ 9%
For income of $ 91/2 , the investment = $ 90.90
For income of $ 1938, the investment= $ 90.90 x 2 x 1938 
= $ 18543.60 . 19
- Find the income on 12% stock of $ 60000 purchased at $ 110.
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Required Income on $ 60000 = Income on $ 1 stock x Face value of the stock
Correct Option: A
Given that :- Face value of the stock = $ 60000
∵ Income on $ 100 stock = $ 12∴ Income on $ 1 stock = $ 12 100
Required Income on $ 60000 = Income on $ 1 stock x Face value of the stockRequired Income on $ 60000 = $ 12 x 60000 = $ 7200 100
- Jatin invested $ 27260 in buying $ 100 shares of a company at $ 116 each. If the company paid 16% dividend at the end of the year, find his income from the dividend.
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Number of shares purchased by Jatin = Total investment Face value
∴ Annual income from 235 shares = 16% x Face value of 235 sharesCorrect Option: C
Given that :- Face value = $ 116 each
Total investment by Jatin = $ 27260Number of shares purchased by Jatin = Total investment Face value Number of shares purchased by Jatin = 27260 = 235 . 116
Face value of 235 shares = $ (235 × 100) = $ 23500.
∴ Annual income from 235 shares = 16% x Face value of 235 shares
Annual income from 235 shares = 16% of $ 23500Annual income from 235 shares = $ 16 x 23500 = $ 3760 100
