Question

Assertion (A): Investing in 12% of the 100 shares at ₹ 150 means, an investment of ₹ 100 gives an annual income of ₹ 12.

Reason (R): Annual income of an investor depends upon the face value of the 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 false, R is true

Explanation:

A is false 12% on a ₹ 100 face-value share gives a dividend of ₹ 12 per share. If the share is quoted at ₹ 150, an investment of ₹ 100 buys `100/150 = 2/3` of a share, so annual income = `(2/3)` × ₹ 12 = ₹ 8, not ₹ 12.

R is true dividend (in rupees) is calculated as a percentage of the face (nominal) value of the share, not of its market price.