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in Financial Mathematics by (47.8k points)
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Sundar bought 4,500 of Rs 10 shares, paying 2% per annum. He sold them when the price rose to Rs 23 and invested the proceeds in Rs 25 shares paying 10% per annum at Rs 18. Find the change in his income.

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Best answer

Number of shares = \(\frac{4500}{10}\) = 450 

Income from 2% stock = Number of shares x face value x Rate of dividend 

= 450 x 10 x \(\frac{2}{100}\) 

= Rs 90 

Selling price of 450 shares = 450 x 23 = Rs 10,350 

Number of shares bought in 10% stock 

\(\frac{Selling\,price\,of\,450\,shares\,at\,Rs\,23}{Market\,value}\)

\(\frac{10350}{18}\)

= Rs 575

Income, from 10% stock = No of shares x face value x Rate of dividend 

= 575 x 25 x \(\frac{10}{100}\)

= 575 x \(\frac{10}{4}\) 

= Rs 1437.5 

= Rs 1437.50 

Charge in his income = Rs 1437.50 – Rs 90 = Rs 1347.50

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