Question

Sundar bought ₹ 4,500, 12% of ₹ 10 shares at par. He sold them when the price rose to ₹ 23 and invested the proceeds in ₹ 25 shares paying 10% per annum at ₹ 18. Find the change in his income.

Answer 1

Number of shares = `4500/10` = 450

Income from 12% stock = Number of shares × face value × Rate of dividend

= 450 × 10 × `12/100`

= ₹ 540

Selling price of 450 shares = 450 × 23 = ₹ 10,350

Number of shares bought in 10% stock = `("Selling price of 450 shares at ₹ 23")/("Market value")`

= `10350/18`

= ₹ 575

Income, from 10% stock = No of shares × face value × Rate of dividend

= 575 × 25 × 10100

= 575 × 104

= ₹ 1437.5

= ₹ 1437.50

Charge in his income = ₹ 1437.50 – ₹ 540 = ₹ 897.50