Exercise : Chapter 3 Shares and Dividends Exercise 3A MCQ Questions and Answers
1. How much money will be required to buy 400, ₹ 12.50 shares at a premium of ₹ 1?
Solution :
Number of shares to be bought = 400
₹ 12.50 shares at a premium of ₹ 1 means
nominal value of the share is ₹ 12.50 and
its market value = ₹ 12.50 + ₹ 1 = ₹ 13.50
∴ Money required to buy 1 share = ₹ 13.50
⇒ Money required to buy 400 shares = 400 x ₹ 13.50 = ₹ 5400
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2. How much money will be required to buy 250, ₹ 15 shares at a discount of ₹ 1.50?
Solution :
Number of shares to be bought = 250
₹ 15 shares at a discount of ₹ 1.50 means;
nominal value of the share is ₹ 15 and
its market value = ₹ 15 - ₹ 1.50 = ₹ 13.50
∴ Money required to buy 1 share = ₹ 13.50
⇒ Money required to buy 250 shares = 250 x ₹ 13.50 = ₹ 3375
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3. A person buys 120 shares at a nominal value of ₹ 40 each, which he sells at ₹ 42.50 each. Find his profit and profit percent.
Solution :
Nominal value of 120 shares = ₹ 40 × 120= ₹ 4,800
Market value of 120 shares = ₹ 42.50 × 120= ₹ 5,100
His profit = ₹ 5,100 – ₹ 4,800 = ₹ 300
profit = 300/4800 × 100% = 6.25%
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4. Find the cost of 85 shares of ₹ 60 each when quoted at ₹ 63.25.
Solution :
Market value of 1 share = ₹ 63.25
Market value of 85 shares = ₹ 63.25 × 85 = ₹ 5,376.25
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5. A man invests ₹ 800 in buying ₹ 5 shares and when they are selling at a premium of ₹ 1.15, he sells all the shares. Find his profit and profit percent.
Solution :
Nominal value of 1 share = ₹ 5
Market value 1 share = ₹ 5 + ₹ 1.15 = ₹ 6.15
Total money invested = ₹ 800
No of shares purchased = 800/5 = 160
Market value of 160 shares = 160 × 6.15= ₹ 984
His profit = ₹ 984 – ₹ 800 = ₹ 184
profit = 184/800 × 100% = 23%
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6. Find the annual income derived from 125, ₹ 120 shares paying 5% dividend.
Solution :
Nominal value of 1 share = ₹ 60
Nominal value 250 shares= ₹ 60 x 250= ₹ 15,000
Dividend = 5% of ₹ 15,000
= 5/100 × 15,000 = ₹ 750
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7.
A man invests ₹ 3,072 in a company paying 5% per annum, when its ₹ 10 share can be bought for ₹ 16 each. Find :
(i) his annual income
(ii) his percentage income on his investment.
Solution :
Market value of 1 share = ₹ 16
Nominal value of 1share = ₹ 10
Money invested = ₹ 3,072
∴ No. of shares purchased = 3072/16 = 192
Nominal value of 192 shares = 10 x 192 = ₹ 1,920
Annual income = 5% of ₹ 1,920
= 5/100 x 1920
= ₹ 96
Income % = 96/3072 x 100% = 3.125% 3 1/8 %
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8.
A man invests ₹ 7,770 in a company paying 5% dividend when a share of nominal value of ₹ 100 sells at a premium of ₹ 5. Find:
(i) the number of shares bought;
(ii) annual income;
(iii) percentage income.
Solution :
Total money invested = ₹ 7,770
Nominal value of 1 share = ₹ 100
Market value of 1 share = ₹ 100 + ₹ 5 = ₹ 105
∴ No. of shares purchased = 7770/105 = 74
Nominal value of 74 shares = 74 x 100 = ₹ 7400
Annual income = 5% of ₹ 7400
= 5/100 x 7400
= ₹ 370
Income % = 370/7770 x 100 % = 4.76 %
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9.
A man buys ₹ 50 shares of a company, paying 12% dividend, at a premium of ₹ 10. Find:
(i) the market value of 320 shares;
(ii) his annual income;
(iii) his profit percent.
Solution :
Nominal value of 1 share = ₹ 50
Market value of 1 share = ₹ 50 + ₹ 10 = ₹ 60
Market value of 320 shares = 320 x 60 = ₹ 19,200
Nominal value of 320 shares = 320 x 5 = ₹ 16,000
Annual income = 12% of ₹ 16000
= 12/100 x 16000
= ₹ 1920
Profit % = 1920/19200 x 100 % = 10%
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10.
A man buys ₹ 75 shares at a discount of ₹ 15 of a company paying 20% dividend. Find:
(i) the market value of 120 shares;
(ii) his annual income;
(iii) his profit percent.
Solution :
Nominal value of 1 share = ₹ 75
Market value of 1 share = ₹ 75 – ₹ 15 = ₹ 60
Market value of 120 shares = 120 × 60 = ₹ 7,200
Nominal value of 120 shares = 120 × 75 = ₹ 9,000
Annual income = 20% of ₹ 9000
= 20/100 x 9000
= ₹ 1800
Profit% = 1800/7200 x 100 % = 25%
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11. A man has 300, ₹ 50 shares of a company paying 20% dividend. Find his net income after paying 3% income tax.
Solution :
Nominal value of 1 share = ₹ 50
Nominal value of 300 shares = 300 × 50 = ₹ 15,000
∴ Dividend = 20% of ₹ 15000
= 20/100 x 15000 = ₹ 3000
∴ Income tax paid = 3% of ₹ 3000
= 3/100 x 3000 = ₹ 90
His net income = ₹ 3,000 – ₹ 90 = ₹ 2,910
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12. A company pays a dividend of 15% on its ten-rupee shares from which it deducts income tax at the rate of 22%. Find the annual income of a man who owns one thousand shares of this company.
Solution :
Nominal value of 1 share = ₹ 10
Nominal value of 1000 shares = 1000 × 10 = ₹ 10,000
∴ Dividend = 15% of ₹ 10,000
= 15/100 x 10000 = ₹ 1,500
∴ Income tax paid = 22% of ₹ 1500
= 22/100 x 1500 = ₹ 330
His net income = ₹ 1,500 – ₹ 330 = ₹ 1,170
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13.
A man invests ₹ 8,800 in buying shares of a company of face value of rupees hundred each at a premium of 10%. If he earns ₹ 1,200 at the end of the year as dividend, find:
(i) the number of shares he has in the company.
(ii) the dividend percent per share.
Solution :
Total investment = ₹ 8,800
Nominal value of 1 share = ₹ 100
Market value of 1 share = ₹ 110
∴ No of shares purchased = 8800/110 = 80
Nominal value of 80 shares = 80 × 100= ₹ 8,000
Let dividend% = y%
then y% of ₹ 8,000 = ₹ 1,200
⇒ y/100 × 8,000 = 1,200
⇒ y = 15%
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14.
A man invests ₹ 1,680 in buying shares of nominal value ₹ 24 and selling at 12% premium. The dividend on the shares is 15% per annum. Calculate:
(i) the number of shares he buys;
(ii) the dividend he receives annually.
Solution :
Nominal value of 1 share = ₹ 24
Market value of 1 share = ₹ 24+ 12% of ₹ 24
= ₹ 24+ ₹ 2.88= ₹ 26.88
Total investment = ₹ 1,680
∴ No of shares purchased = 1680/268 } = 62.5
Nominal value of 62.5 shares = 62.5 x 24= ₹ 1,500
Dividend = 15% of ₹ 1,500
= 15/100 × 1,500 = ₹ 225
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15. By investing ₹ 7,500 in a company paying 10 percent dividend, an annual income of ₹ 500 is received. What price is paid for each of ₹ 100 share ?
Solution :
Total investment = ₹ 7,500
Nominal value of 1 share = ₹ 100
No. of shares purchased = y
Nominal value of y shares = 100 x y = ₹ (100y)
Dividend% = 10%
Dividend = ₹ 500
∴ 10% of 100y = ₹ 500
⇒ 10/100 x100y = ₹ 500
⇒ y = 500/100 = 50 shares
∴ Market value of 1 share = 7500/50 = ₹ 150
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