Question

Assertion (A) : Income of a share holder is directly proportional to the number of shares he buys.

Reason (R) : $$\text{Income of a share holder} = \text{Face value} \times \frac{\text{No. of shares} \times \text{Rate of dividend}}{100}$$

Options

• Both A and R are true, and R is the correct explanation of A.

• Both A and R are true, but R is not the correct explanation of A.

• A is true, but R is false.

• A is false, but R is true.

Answer 1

Both A and R are true, and R is the correct explanation of A.

Explanation:

Step 1 – Assertion: A is true. For a fixed face value and dividend rate, buying more shares increases the income in the same proportion.

Step 2 – Reason: R is true. It gives the formula for a shareholder’s income.

Step 3 – Link: The formula shows that income is multiplied by the number of shares, so R correctly explains A.