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Shares Tutorial-1

The document discusses stocks and shares, including definitions of stock and face value. It provides examples of calculating costs and returns from purchases and sales of stocks. It also includes word problems for calculating incomes from various stock investments based on face value, price, interest rates, taxes, and dividends.

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33 views4 pages

Shares Tutorial-1

The document discusses stocks and shares, including definitions of stock and face value. It provides examples of calculating costs and returns from purchases and sales of stocks. It also includes word problems for calculating incomes from various stock investments based on face value, price, interest rates, taxes, and dividends.

Uploaded by

sls
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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STOCKS AND SHARES

STOCK:
The money borrowed by government or any reputed company from public at a fixed rate of
interest is called stock.

Example : Indira Vikas Patra


Kisan Vikas Patra

The amount invested by a person initially is called Face Value of the stock. Usually a period
is prescribed for the repayment of the loan. When stock is purchased, brokerage is added to
the cost price.
When stock is sold, brokerage is subtracted from the
selling price. The selling price of Rs.100 stock is said to be at par, above par and below
Par according as the selling price of the stock is Rs.100 exactly, more than Rs.100 or below
Rs.100 respectively.

Note:
“ Rs.800, 6% of stock at Rs.95” implies
Total holding of stock =Rs.800
Face value of stock = Rs.100
Market value = Rs.97
Interest per annum = 6%
Examples:

1.What amount is received to the purchase Rs.1600, 8 % stock at Rs. 105. (Brokerage =

%)

Solution:

To purchase Rs.100 stock, we need 105+

Purchase of Rs.1600 stock

=Rs
2. Find the cash realized by selling Rs.2400, 5 stock at 5 premium (Brokerage= )

Solution:

Rs.100+5 = Rs.105 is the market value

Cash realized for Rs.100 stock = 105- =

Cash Received on selling Rs.2400 Stock = = Rs.2514

3. Find the better investment of 5 % stock at Rs.102 and 4 stock at Rs.96

Solution

at Rs.102 gives an income of Rs. . 100 or 5.39% of investment.

4 at Rs.96 gives an income of Rs. 100% or 4.9% of investment

The first is the better.

4. What should be the investment in 6 stock at Rs.10 premium to secure an annual

income of Rs.600?

Solution:

For Rs.110 investment income is

For Rs.600 investment income is

5.A man sells Rs.5000, 4 stock at Rs.144 and invests the proceeds partly in 3% stock

at 90 and the remains in 4% stock at 108.If his income increases by Rs.25 ,how much
money is invested in each stock?

Solution:
Selling price of the stock =

3% at 90: 4% at 108 = 5: 3

Investment in 3% stock = 7200

Investment in 4% stock = 7200-4500 = Rs.2700

SHARE:

1.Find the cost of 96 shares of Rs.10 at Rs. discount and Rs. brokerage per share.

Solution :

Cost of 1 share = Rs.

Cost of 96 shares = Rs.912

2. Find the rate of income derived from 40 shares of Rs.25 each at Rs.5 premium
(Brokerage ¼ per share), the rate of dividend being 5%.

Solution :

Cost of 1 share = Rs.

Cost of 40 shares =Rs.1210= Investment


Face value of 40 shares = 4025=Rs.1000
Dividend on Rs.100 =Rs. 5
Dividend on Rs.1100 = Rs.55
Income on investment of Rs.1210 is Rs.55

Rate of income =

3. What is the market value of a 4% stock which yields 6 after paying an income tax of

5%?

Solution:
Tax on Rs.4 at 5% = 0.20
Net income = Rs.3.80

For Rs. income, investment is = Rs.100

For 3.80 income, investment is = Rs.60

4.A Corporation declares a half yearly dividend of 6%. X possess 350 shares whose face
value is Rs.80.How much dividend does he receive per year?

Solution:
Face value of 350 shares = 35080=28000

Dividend =

5. A person invests Rs.589500 in 3% stock at Rs.62 and sells out when the price rises to

Rs. 66 . He invests the amount in 5% stock at Rs.105.What is the change in his income?

Solution:

Rs.100 share is purchased at Rs. .

For Rs.589500, the worth of stock purchased= =Rs.943200

Income for Rs.100=Rs.

Income for Rs.943200 is

Stock purchase for Rs.624870 is =Rs.589500

Income on first stock = =Rs.28296

Income on second stock = =Rs.29475

Change in income =Rs.29475-28296=Rs.1179

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