Question

Find the cost of 60 shares of Rs. 50 each quoted at Rs. 54. Find also the gain to the original shareholder.

Answer 1

Step 1:

Given information:

Number of shares to be purchased$=60$

Quoted price of each share$=\mathrm{Rs}.54$ (market value)

Face value of each share$=\mathrm{Rs}.50$

Step 2:

Total cost of shares:

Since, cost of each share is quoted as $\mathrm{Rs}.54$

$$\begin{gathered} \therefore \mathrm{Total}\mathrm{cost}\mathrm{of}60\mathrm{shares}=\mathrm{Rs}.(60\times 54) \\ =\mathrm{Rs}.3,240 \end{gathered}$$

Step 3:

Gain to original stockholder:

$$\begin{gathered} \mathrm{Gain}=\mathrm{Number}\mathrm{of}\mathrm{shares}\times (\mathrm{Market}\mathrm{value}-\mathrm{face}\mathrm{value}) \\ \Rightarrow \mathrm{Gain}=60\times (54-50) \\ \Rightarrow \mathrm{Gain}=60\times 4=\mathrm{Rs}.240 \end{gathered}$$

Hence, the cost of 60 shares is Rs. 3,240 and gain to the original stockholder is Rs. 240