Question

A man invested Rs. 45,000 in 15% Rs. 100 shares quoted at Rs. 125. When the market value of these shares rose to Rs. 140, he sold some shares, just enough to raise Rs. 8,400.

Calculate:

(i) The number of shares he still holds;

(ii) The dividend due to him on these remaining shares.

Answer 1

(i)

Total investment = Rs. 45,000

Market value of 1 share = Rs. 125

∴ No of shares purchased = 45000/125 = 360 shares

Nominal value of 360 shares = Rs. 100 × 360 = Rs. 36,000

Let no. of shares sold = n

Then sale price of 1 share = Rs. 140

Total sale price of n shares = Rs. 8,400

Then n = 8,400/140 = 60 shares

The no. of shares he still holds = 360 – 60 = 300

(ii)

Nominal value of 300 shares = Rs. 100 × 300 = Rs. 30,000

Dividend% = 15%

Dividend = 15% of Rs. 30,000

= (15/100) × Rs.30,000 = Rs.4,500