Question

Assertion (A): A man invests ₹ 4600 in ₹ 100 shares, paying 10% dividend and quoted at 15% premium. His annual dividend from these shares is ₹ 400.

Reason (R): Number of shares held by a person = `"Total market value"/"Face value of 1 share"`

Options

• A is true, R is false

• A is false, R is true

• Both A and R are true

• Both A and R are false

Answer 1

A is true, R is false

Explanation:

Market (quoted) price = ₹ 100 + 15% of ₹ 100

= ₹ 115

Number of shares = 4600 ÷ 115

= 40

Number of shares is always investment ÷ Market price per share.

Dividend per share = 10% of face value

= 10% of ₹ 100

= ₹ 10

So, total annual dividend = 40 × ₹ 10

= ₹ 400

Dividend is calculated on face value, not market price.

Reason R is false because it uses face value in the denominator; the correct formula is number of shares = total market value (investment) ÷ market (quoted) price per share.