# 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

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.

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

Q:

Find the cash realised by selling Rs. 2440, 9.5% stock at 4 discount (brokerage 1/4 %)

 A) 2000 B) 2298 C) 2290 D) 2289

Explanation:

By selling Rs. 100 stock , cash realised = $Rs.100-4-14=Rs.3834$

By selling Rs. 2400 stock, cash realised =$Rs.3834*1100*2400$ = Rs 2298.

9 4855
Q:

A man sells Rs.5000, 12 % stock at 156 and uinvests the proceeds parity in 8 % stock at 90 and 9 % stock at 108. He hereby increases his income by Rs. 70. How much of the proceeds were invested in each stock?

 A) 4000 B) 4200 C) 4002 D) 4020

Explanation:

S.P of Rs. 5000 stock = $Rs.156100*5000$= Rs. 7800.

Income from this stock = $Rs.12100*5000$ = Rs. 600.

Let investment in 8 % stock be x and that in 9 % stock = (7800 - x).

Therefore,

$x*890+7800-x*9108=600+70$

$4x45+7800-x12=670⇔x=3600$

Therefore,  Money invested in 8 % stock at 90 = Rs. 3600.

Money invested in 9 % at 108 = Rs. (7800-3600) = Rs. 4200.

9 4242
Q:

Find the annual income derived by investing Rs. 6800 in 10% stock at 136.?

 A) 250 B) 1500 C) 500 D) 50

Explanation:

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

By investing Rs. 6800, income obtained = $Rs.1036×6800$ = Rs. 500.

0 4069
Q:

The cash realised on selling a 14% stock is Rs.106.25, brokerage being 1/4% is

 A) 123 B) 106 C) 100 D) 156

Explanation:

Cash realised= Rs. (106.25 - 0.25)
= Rs. 106.

4 3324
Q:

A invested some money in 10% stock at 96. If B wants to invest in an equally good 12% stock, he must purchase a stock worth of :

 A) Rs.80 B) Rs.115.20 C) Rs.120 D) Rs.125.40

Explanation:

For an income of Rs. 10, investment = Rs. 96.

For an income of Rs. 12, investment = Rs. (96/10)*12 = Rs. 115.20.

2 2860
Q:

Find the cost of Rs. 4500, 8.5% stock at 4 premium?

 A) 1400 B) 5000 C) 4000 D) 4680

Explanation:

Cost of Rs. 100 stock  = Rs. (100+4) = Rs.104

Cost of Rs. 4500 stock =$Rs.104100×4500$ = Rs. 4680

1 2754
Q:

The market value of a 10.5% stock, in which an income of Rs. 756 is derived by investing Rs. 9000, brokerage being 1/4%, is:

 A) 108.25 B) 112.20 C) 124.75 D) 125.25

Explanation:

For an income of Rs. 756, investment = Rs. 9000.

For an income of $Rs.212$,  investment =$Rs.9000756×212$ = Rs. 125.

For a Rs. 100 stock, investment = Rs. 125.

Market value of Rs. 100 stock = $Rs.125-14$= Rs. 124.75

3 2444
Q:

By investing Rs. 1620 in 8% stock, Michael earns Rs. 135. The stock is then quoted at ?

 A) Rs. 145 B) Rs. 245.1 C) Rs. 96 D) Rs. 75