Question

If $50$ shares of FV Rs $10$ were purchased for MV Rs $25$. The company declared $30\%$ dividend on the shares, then what is the rate of return?

• A. $16\%$
• B. $12\%$
• C. $5\%$
• D. $10\%$

Answer 1

Answer: (B)

$12\%$

Face value of share $=10$

Market value of share $=25$

Shares bought $=50$

Dividend $=30\%$

$Income$ $=$ Dividend$\%$ $\times$ FV $\times$ number of shares $=\frac{30}{100}\times 10\times 50$

$=150$

$Investment$ $=$ MV $\times$ number of shares $=1250$

Rate of return $=\frac{Income}{Investment}\times 100=\frac{150}{1250}\times 100$

$=12\%$