Question

A man buys 400 ten-rupee shares at a premium of Rs. 2.50 on each share. If the rate of dividend is 8%, Find,
(i) his investment
(ii) dividend received
(iii) yield.

Answer 1

No. of shares = 400
Face value of each share = Rs.10
Market value of each share
= Rs.10 + Rs. 2.50
= Rs.12.50
Rate of dividend = 8%
∴ Face value of 400shares
= Rs.10 x 400
= Rs.4000
(i) Total investment
= Rs.12.50 x 400
= Rs.5000
(ii) Total dividend
= Rs.4000 x `(8)/(100)`
= Rs.320
(iii) Yield percent

= `(320 xx 100)/(5000)`

= `(32)/(5)`
= 6.4%.