What is the cost of ₹5,000 of stock (face value) bought at an 8% premium? (Ignore brokerage.)

₹5,400. At an 8% premium the market price is ₹108 per ₹100 of stock, so ₹5,000 of stock costs 5000 108100 = ₹5,400.

How much is needed to buy 100 shares of face value ₹10 at a discount of ₹2? (Ignore brokerage.)

₹800. Each share costs 10 - 2 = ₹8, so 100 shares cost 100 8 = ₹800.

A man invests ₹4,500 in a 9% stock at 90. What is his annual income?

₹450. At a price of 90 he buys 450090 100 = ₹5,000 of stock (face value). The 9% dividend gives 9\% of ₹5,000 = ₹450.

What is the yield percent on a 12% stock bought at 150?

8%. Spending ₹150 to earn a ₹12 dividend gives a yield of 12150 100 = 8\%.

Which is the better investment: a 10% stock at 120 or an 8% stock at 90?

8% stock at 90. The 10% stock at 120 yields 10120 100 = 8.33\%; the 8% stock at 90 yields 890 100 = 8.89\%. The higher yield makes the 8% stock at 90 the better investment.

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Quantitative Aptitude · Commercial Maths

Stocks and Shares — Questions & Answers

Stock questions distinguish face value (on which the dividend is paid) from market value (what you pay). Add brokerage to a purchase and subtract it from a sale.

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Key formulas included

Key formulas

Dividend income $=$ (number of shares) $\times$ (face value) $\times$ (dividend rate)
Market price of a stock 'at a premium of $x$ ' is $100 + x$ ; 'at a discount of $x$ ' is $100 - x$ (per ₹100 face value)
Yield $= \dfrac{\text{annual income}}{\text{amount invested}} \times 100\%$

5 solved Stocks and Shares questions

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01
What is the cost of ₹5,000 of stock (face value) bought at an 8% premium? (Ignore brokerage.)
4 steps · reveal one at a time
1. Step 1: Understand Premium
  A stock bought at a premium means its market price is higher than its face value. An 8% premium indicates that the market price is 8% above the face value.
2. Step 2: Calculate Market Price
  For every ₹100 of stock (face value), an 8% premium means you pay ₹8 extra. So, the market price for ₹100 of stock is $\text{Rs}\,100 + \text{Rs}\,8 = \text{Rs}\,108$ .
3. Step 3: Find Total Cost
  To find the total cost for ₹5,000 of stock, we multiply the face value by the premium factor. This is calculated as $\text{Rs}\,5000 \times \frac{108}{100}$ .
4. Step 4: The answer
  So the answer is (B) ₹5,400. The calculation gives us $5000 \times 1.08 = \text{Rs}\,5,400$ , which is the total cost of the stock.
02
How much is needed to buy 100 shares of face value ₹10 at a discount of ₹2? (Ignore brokerage.)
3 steps · reveal one at a time
1. Step 1: Find Share Price
  The face value of each share is ( \text{₹}10 ). However, the shares are being sold at a discount of ( \text{₹}2 ). To find the actual price per share, subtract the discount from the face value: ( \text{₹}10 - \text{₹}2 = \text{₹}8 ).
2. Step 2: Calculate Total Cost
  Now that we know each share costs ( \text{₹}8 ), we can calculate the total amount needed to buy 100 shares. Multiply the number of shares by the price per share: ( 100 \times \text{₹}8 = \text{₹}800 ).
3. Step 3: The answer
  So the answer is (B) ( \text{₹}800 ). This is the total cost to buy 100 shares after accounting for the discount on each share.
03
A man invests ₹4,500 in a 9% stock at 90. What is his annual income?
4 steps · reveal one at a time
1. Step 1: Calculate Face Value
  First, we need to find the face value of the stock the man buys. A stock at 90 means you pay ₹90 for stock with a face value of ₹100. He invests ₹4,500.
2. Step 2: Find Total Stock Value
  To find the total face value of the stock purchased, we use the investment amount and the stock price. The face value of the stock is calculated as $(4500 / 90) \times 100 = \text{\text{Rs}\,}5,000$ .
3. Step 3: Calculate Annual Income
  The stock pays a 9% dividend. This dividend is always calculated on the face value of the stock. So, his annual income is $9\% \text{ of } \text{\text{Rs}\,}5,000$ .
4. Step 4: The answer
  Calculating $9\% \text{ of } \text{\text{Rs}\,}5,000$ gives us $(9/100) \times 5000 = \text{\text{Rs}\,}450$ . So the answer is (C) ₹450, which is his annual income from the investment.
04
What is the yield percent on a 12% stock bought at 150?
4 steps · reveal one at a time
1. Step 1: Understand Yield
  The yield percent on a stock tells you the annual return you get based on the price you paid for it. It's a way to measure the income generated by the stock relative to its cost.
2. Step 2: Identify Values
  We are told it's a '12% stock', which implies an annual dividend of 12 units (e.g., $12). The stock was bought at 150 units (e.g.,$ 150). These are the key figures for our calculation.
3. Step 3: Calculate Yield
  To find the yield percent, we divide the annual dividend by the purchase price and multiply by 100. So, the calculation is $\frac{12}{150} \times 100$ .
4. Step 4: The answer
  So the answer is (D) 8%. Performing the calculation $\frac{12}{150} \times 100 = 0.08 \times 100 = 8\%$ . This means you earn 8% of your investment back annually.
05
Which is the better investment: a 10% stock at 120 or an 8% stock at 90?
4 steps · reveal one at a time
1. Step 1: Understand the Goal
  To find the better investment, we need to compare their yields. The yield tells us the percentage return we get on the price paid for the stock. A higher yield means a better investment.
2. Step 2: Calculate First Stock's Yield
  Let's calculate the yield for the 10% stock at 120. The yield is found by dividing the dividend by the price, then multiplying by 100 to get a percentage: $\frac{10}{120} \times 100 = 8.33\%$ .
3. Step 3: Calculate Second Stock's Yield
  Now, let's calculate the yield for the 8% stock at 90. Using the same formula: $\frac{8}{90} \times 100 = 8.89\%$ . This is the yield for the second investment option.
4. Step 4: The answer
  So the answer is (C) 8% stock at 90. Comparing the two yields, $8.89\%$ is higher than $8.33\%$ , making the 8% stock at 90 the better investment.

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