# 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) 12 | B) 15 |

C) 18 | D) 20 |

Explanation:

Dividend on Rs. 20 = Rs. (9/100)x 20 = Rs.9/5.

Rs. 12 is an income on Rs. 100.

Rs.9/5 is an income on Rs.[ (100/12) x (9/5)] = Rs. 15.

A) Rs.95.75 | B) Rs.96 |

C) Rs.96.25 | D) Rs.104.25 |

Explanation:

CP. =$Rs.\left(100-4+\frac{1}{4}\right)$ = Rs.96.25

A) 3100 | B) 6240 |

C) 6500 | D) 9600 |

Explanation:

To obtain Rs. 10, investment = Rs. 96.

To obtain Rs. 650, investment = $Rs.\frac{96*650}{10}$ = Rs. 6240.

A) Rs.48 | B) Rs.75 |

C) Rs.96 | D) Rs.133.33 |

Explanation:

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

For an income of Rs 6, investment =Rs. (100/8*6) = Rs. 75

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

A) 107.04 | B) 648 |

C) 500 | D) 648.60 |

Explanation:

Number of shares = $\frac{4455}{8.25}$= 540.

Face value = Rs. (540 x 10) = Rs. 5400.

Annual income = $Rs.\left(\frac{12}{100}*5400\right)$ = Rs. 648.

A) 67 | B) 110 |

C) 112 | D) 120 |

Explanation:

To earn Rs. 10, money invested = Rs. 100.

To earn Rs. 12, money invested =$Rs.\left(\frac{100}{10}*12\right)$ = Rs. 120.

Market value of Rs. 100 stock = Rs. 120.

A) Rs. 8% | B) Rs. 12% |

C) Rs. 12.5% | D) Rs. 16% |

Explanation:

By investing Rs 128, income derived = Rs. 16

By investing Rs. 100, income derived =Rs. (16/128*100) = Rs.12.5

Interest obtained = 12.5%

A) 80 | B) 96 |

C) 106 | D) 108 |

Explanation:

To earn Rs. 135, investment = Rs. 1620.

To earn Rs. 8, investment =$Rs.\frac{1620}{135}\times 8$= Rs. 96.

Market value of Rs. 100 stock = Rs. 96.