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Question

How much money will be required to buy 400 shares id nominal value is Rs 12.50 per share at a premium of Rs 1?


Solution

Number of Shares(n) = 400

Nominal Value of One Share (N.V.) = Rs 12.50

Market Value of One Share(M.V.) = N.V. of One Share + Premium
                                                      = 12.50 + 1
                                                      = Rs. 13.50

Sum Invested(Money Required) =  Number of Shares × M.V. of 1 Share
                                                    = 400 × 13.50
                                                    = Rs. 5400

Thus, the money required to buy 400 shares is Rs. 5400.

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