If the face value of a share is ₹40 and the MV is 12% above the FV, then which of the following statements is correct?

The share is at a discount of ₹8.4

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The share is at a discount of ₹4.8

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The share is at par

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The share is at a premium of ₹4.8

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Solution

The correct option is D The share is at a premium of ₹4.8
Given: MV = 12% above ₹40
$\Rightarrow$ Market value $= \frac{12}{100} \times 40 + ₹ 40$
$= ₹ 44.8$
We know that, if Market Value (MV) $>$ Face Value (FV) then the share is at premium.
$∴$ The share is at a premium of ₹4.8.

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If the face value of a share is ₹40 and the MV is 12% above the FV, then which of the following statements is correct?

The correct option is D The share is at a premium of ₹4.8Given: MV = 12% above ₹40 ⇒ Market value =12100×40+₹40 =₹44.8 We know that, if Market Value (MV) > Face Value (FV) then the share is at premium. ∴ The share is at a premium of ₹4.8.

The correct option is D The share is at a premium of ₹4.8
Given: MV = 12% above ₹40
$\Rightarrow$ Market value $= \frac{12}{100} \times 40 + ₹ 40$
$= ₹ 44.8$
We know that, if Market Value (MV) $>$ Face Value (FV) then the share is at premium.
$∴$ The share is at a premium of ₹4.8.