# 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) 2000 | B) 2298 |

C) 2290 | D) 2289 |

Explanation:

By selling Rs. 100 stock , cash realised = $Rs.\left[\left(100-4\right)-\frac{1}{4}\right]=Rs.\frac{383}{4}$

By selling Rs. 2400 stock, cash realised =$Rs.\left(\frac{383}{4}*\frac{1}{100}*2400\right)$ = Rs 2298.

A) 4000 | B) 4200 |

C) 4002 | D) 4020 |

Explanation:

S.P of Rs. 5000 stock = $Rs.\left(\frac{156}{100}*5000\right)$= Rs. 7800.

Income from this stock = $Rs.\left(\frac{12}{100}*5000\right)$ = Rs. 600.

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

Therefore,

$\left(x*\frac{8}{90}\right)+\left(7800-x\right)*\frac{9}{108}=\left[600+70\right]$

$\frac{4x}{45}+\frac{7800-x}{12}=670\iff x=3600$

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

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

A) 250 | B) 1500 |

C) 500 | D) 50 |

Explanation:

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

By investing Rs. 6800, income obtained = $Rs.\frac{10}{36}\times 6800$ = Rs. 500.

A) 123 | B) 106 |

C) 100 | D) 156 |

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.

A) 1400 | B) 5000 |

C) 4000 | D) 4680 |

Explanation:

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

Cost of Rs. 4500 stock =$Rs.\frac{104}{100}\times 4500$ = Rs. 4680

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 $Rs.\frac{21}{2}$, investment =$Rs.\frac{9000}{756}\times \frac{21}{2}$ = Rs. 125.

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

Market value of Rs. 100 stock = $Rs.\left(125-\frac{1}{4}\right)$= Rs. 124.75

A) Rs. 145 | B) Rs. 245.1 |

C) Rs. 96 | D) Rs. 75 |

Explanation:

Michel earns Rs. 135 by investing Rs. 1620

To earn Rs. 8 how much he have to invest...?

= (8 x 1620)/135 = Rs. 96