# Stocks and Shares Questions

**FACTS AND FORMULAE FOR STOCKS AND SHARES QUESTIONS**

**1. Stock-capital: **The total amount needed to run the company is called the stock-capital

**2. Shares or stock: **The whole capital is divided into small units, called shares or stock. For each investment, the company issues a share-certificate, showing the value of each share and the number of shares held by a person. The person who subscribers in shares or stock is called a share holder or stock holder.

**3. Dividend:** The annual profit distributed among share holders is called dividend. Dividend is paid annually as per share or as a percentage.

**4. Face Value:** The value of a share or stock printed on the share-certificate is called its Face Value or Nominal Value or Par Value.

**5. Market Value: **The stocks of different companies are sold and bought in the open market through brokers at stock-exchanges. A share (or stock) is said to be:

(i) **At premium **or **Above par**, if its market value is more than its face value.

(ii) **At par**, if its market value is the same as its face value.

(iii) **At discount **or **Below par**, if its market value is less than its face value. Thus, if a Rs.100 stock is quoted at a premium of 16, then market value of the stock = Rs. (100+16) = Rs. 116. Likewise, I f a Rs. 100 stock is quoted at a discount of 7, then market value of the stock = Rs. (100-7) = Rs. 93.

**6. Brokerage: **The broker’s charge is called brokerage.

**(i)** When stock is purchased, brokerage is added to the cost price.

**(ii)** When stock is sold, brokerage is subtracted from the selling price.

**Remember:**

**(i)** The face value of a share always remains the same.

**(ii)** The market value of a share changes form time to time.

**(iii)** Dividend is always paid on the face value of a share.

**(iv)** Number of shares held by a person

$\frac{TotalInvestment}{Investmentin1share}=\frac{TotalIncome}{Incomefrom1share}=\frac{TotalFaceValue}{FaceValueof1share}$

Thus, by a Rs. 100, 9% stock at 120, we mean that:

**(i)** Face Value (N>V) of stock = Rs. 100.

**(ii)** Market Value (M>V) of stock = Rs. 120.

**(iii)** Annual dividend on 1 share = 9% of face value = 9% of Rs. 100 = Rs. 9.

**(iv)** An investment of Rs. 120 gives an annual income of Rs. 9.

**(v)** Rate of interest p.a = Annual income from an investment of Rs. 100.

$\left(\frac{9}{120}\times 100\right)\%$ = $7\frac{1}{2}\%$

A) 70 | B) 76 |

C) 75 | D) 80 |

Explanation:

For an income of Rs. 8, investment = Rs. 100.

For an income of Rs. 6, investment = $Rs.\left(\frac{100}{8}*6\right)$= Rs. 75.

Market value of Rs. 100 stock = Rs. 75.

A) Both are equally good | B) 9 3/4% stock at 117 |

C) Cannot be compared, as the total amount of investment is not given | D) 11% stock at 143 |

Explanation:

Let investment in each case be Rs. (143 x 117).

Income in 1st case = Rs.$\frac{11}{143}$ x 143 x 117 = Rs. 1287.

Income in 2nd case = Rs.$\frac{39}{4\times 117}$ x 143 x 117= Rs. 1394.25

Clearly, 9 3/4% stock at 117 is better.

A) RS.105.50 | B) RS.106 |

C) RS.106.50 | D) RS.113.75 |

A) 2000 | B) 5440 |

C) 6000 | D) 5140 |

Explanation:

Cost of Rs. 100 stock = Rs. (100-15)

Cost of Rs. 6400 stock = $Rs.\frac{85}{100}*6400$ = Rs. 5440.

A) Rs.500 | B) Rs.100 |

C) Rs.520 | D) Rs.340 |

Explanation:

By investing Rs.136, income obtained = Rs. 10

By investing Rs 6800, income obtained = $\frac{\mathbf{6800}\mathbf{\times}\mathbf{10}}{\mathbf{136}}$= Rs.500

A) Rs. 34000 | B) Rs. 31245 |

C) Rs. 24315 | D) Rs. 28000 |

Explanation:

Let the monthly salary of Shankar be = Rs.x

Amount invested on expenditure = 25% = x/4;

Remaning amount = 3x/4;

Amount invested on children education = 20% i.e = 3x/20;

Remaining amount = 3x/4 - 3x/20 = 3x/5;

Remaining amount invested in three different schemes i.e is 1/3(3x/5)

=> x/5 = 5600

Therefore x = 28000

Hence, Monthly salary of Shankar is Rs. 28,000.