Question

How much should a man invest in Rs. $50$ shares selling at Rs. $60$ to obtain an income of Rs. $450$, if the rate of dividend declared is $10\%$. Also find his yield percent, to the nearest whole number.

Answer 1

Face value of one share $=Rs.50$

Market value of one share $=Rs.60$

The dividend on one share $=10\%$

Profit on one share$=10\%ofRs.50=Rs.5$

So the income on $Rs.60$ share is $Rs.5$

Hence the yield per cent is =$\frac{5}{60}$$\times 100\%=8.3\%=8\%$ approx

And he earns $Rs.450$ by by selling shares

Income on one share $=Rs.5$

So no. of share=$\frac{Rs.450}{Rs.5}=90$

Therefore investment=No. of shares x market value of one share$=Rs.90$ $\times 60$ $=Rs.5400$