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Question
Market value of shares and dividend declared by the two companies is given below. Face Value is same and it is Rs. 100 for both the shares. Investment in which company is more profitable ?
(1) Company A - Rs 132, 12%
(2) Company B - Rs 144, 16%
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Solution
For company A:
The face value of each share is Rs. 100.
Market value of share of company A = Rs. 132
Rate of dividend = 12%
Dividend = 12% of FV = 12% of Rs. 100 = `(12)/(100) × 100` = ₹ 12.
Rate of return = `"Dividend"/"Sum invested" × 100% = (12)/(132) × 100%` = 9.09%
For company B:
The face value of each share is Rs. 100.
Market value of share of company B = Rs. 144
Rate of dividend = 16%
Dividend = 16% of FV = 16% of Rs. 100 =`(16)/(100) × 100` = ₹ 16.
Rate of return = `"Dividend"/"Sum invested" × 100% = (16)/(144) × 100%` = 11.11%
∴ Rate of return from company B > Rate of return from company A
Thus, the investment in company B is more profitable.
RELATED QUESTIONS
Complete the following table by writting suitable numbers and words.
| Sr.No | FV | Share is at | MV |
| (1) | Rs 100 | par | ... |
| (2) | ... | premium Rs 500 | Rs 575 |
| (3) | Rs 10 | ... | Rs 5 |
Joseph purchased following shares, Find his total investment.
| Company A : 200 shares, | FV = Rs 2 | Premium = Rs 18 |
| Company B : 45 shares, | MV = Rs 500 | |
| Company C : 1 share, | MV = Rs 10,540. |
If the face value of both the shares is same, then which investment out of the following is more profitable?
Company A : dividend 16%, MV = ₹ 80, Company B : dividend 20%, MV = ₹ 120.
Market value of a share is Rs 200. If the brokerage rate is 0.3% then find the purchase value of the share.
Write the correct alternative for the following questions.
If the Face Value of a share is Rs 100 and Market value is Rs 75, then which of the following statements is correct ?
Find the number of shares received when Rs 60,000 was invested in the shares of FV Rs 100 and MV Rs 120.
Shri Shantilal has purchased 150 shares of FV ₹ 100, for MV of ₹ 120, Company has paid dividend at 7%, then to find the rate of return on his investment, complete the following activity:
Solution: FV = ₹ 100; Number of shares = 150
Market value = ₹ 120
1. Sum investment = MV × No. of Shares
= `square xx square`
∴ Sum investment = ₹ 18,000
2. Dividend per share = FV × Rate of dividend
= `square xx square/100`
= ₹ 7
∴ Total dividend received = 150 × 7
= `square`
3. Rate of return = `"Dividend income"/"Sum inve ted" xx 100`
= `1050/18000 xx 100`
= `square`
If FV = ₹ 460 and premium = ₹ 165, then what is the value of MV?
What is the total amount of money needed to run the company called?
Which of the following describes a shareholder?
The value of a share printed on the share certificate is called its:
A share whose Market Value equals its Face Value is described by which term?
Which relationship correctly describes a share issued at a discount?
A share has a Face Value of \( ₹25 \) and a Market Value of \( ₹16 \). How is the share described and what is the amount?
Smita has invested \( ₹12,000 \) and purchased shares of FV \( ₹10 \) at a premium of \( ₹2 \). How many shares did she purchase?
Which of the following is a market index and the exchange with which it is associated?
The Sum Invested in shares is calculated as:
Investment is defined as:
