Question

At which price should a 9% ₹ 100 share be quoted when the money is worth 6%?

Answer 1

Given:

Nominal value = ₹ 100

Dividend rate = 9% → Dividend per share = ₹ 9

Required return (yield) = 6%

Yeild = `("Dividend"/"Market Price") xx 100`

`6 = (9/"Market Price") xx 100`

`=> "Market Price" = (9xx100)/6`

= ₹ 150