Question

A man invested ₹ 9000 in 3% stock at 90. He sold the stock when the price rose to 95 and invested the sale proceeds in a 4% stock, thereby increasing his income by ₹ 80. At what price did he buy the later stock?

Answer 1

Given:

Initial investment = ₹ 9000 in 3% stock at ₹ 90

Sold at ₹ 95

Reinvested in 4% stock

Income increased by ₹ 80

Nominal value = `(9000/90)xx100`

= ₹ 10,000

Income = 3% of ₹ 10,000

= ₹ 300

Proceeds = `(10000/100)xx95`

= ₹ 9500

New income = ₹ 300 + ₹ 80

= ₹ 380

Let the price of 4% stock = ₹ x

Nominal value purchased `= 9500/x xx100`

Income = `4/100xx(9500/x xx100)`

`=(4xx9500)/x`

`=38000/x = 380`

`=> x=38000/380`

= ₹ 100