###### Exercise : Chapter 3 Shares and Dividends Exercise 3A MCQ Questions and Answers

**1. **
How much money will be required to buy 400, ₹ 12.50 shares at a premium of ₹ 1?

**Solution :**

Number of shares to be bought = 400

₹ 12.50 shares at a premium of ₹ 1 means

nominal value of the share is ₹ 12.50 and

its market value = ₹ 12.50 + ₹ 1 = ₹ 13.50

∴ Money required to buy 1 share = ₹ 13.50

⇒ Money required to buy 400 shares = 400 x ₹ 13.50 = ₹ 5400

**2. **
How much money will be required to buy 250, ₹ 15 shares at a discount of ₹ 1.50?

**Solution :**

Number of shares to be bought = 250

₹ 15 shares at a discount of ₹ 1.50 means;

nominal value of the share is ₹ 15 and

its market value = ₹ 15 - ₹ 1.50 = ₹ 13.50

∴ Money required to buy 1 share = ₹ 13.50

⇒ Money required to buy 250 shares = 250 x ₹ 13.50 = ₹ 3375

**3. **
A person buys 120 shares at a nominal value of ₹ 40 each, which he sells at ₹ 42.50 each. Find his profit and profit percent.

**Solution :**

Nominal value of 120 shares = ₹ 40 × 120= ₹ 4,800

Market value of 120 shares = ₹ 42.50 × 120= ₹ 5,100

His profit = ₹ 5,100 – ₹ 4,800 = ₹ 300

profit = 300/4800 × 100% = 6.25%

**4. **
Find the cost of 85 shares of ₹ 60 each when quoted at ₹ 63.25.

**Solution :**

Market value of 1 share = ₹ 63.25

Market value of 85 shares = ₹ 63.25 × 85 = ₹ 5,376.25

**5. **
A man invests ₹ 800 in buying ₹ 5 shares and when they are selling at a premium of ₹ 1.15, he sells all the shares. Find his profit and profit percent.

**Solution :**

Nominal value of 1 share = ₹ 5

Market value 1 share = ₹ 5 + ₹ 1.15 = ₹ 6.15

Total money invested = ₹ 800

No of shares purchased = 800/5 = 160

Market value of 160 shares = 160 × 6.15= ₹ 984

His profit = ₹ 984 – ₹ 800 = ₹ 184

profit = 184/800 × 100% = 23%

**6. **
Find the annual income derived from 125, ₹ 120 shares paying 5% dividend.

**Solution :**

Nominal value of 1 share = ₹ 60

Nominal value 250 shares= ₹ 60 x 250= ₹ 15,000

Dividend = 5% of ₹ 15,000

= 5/100 × 15,000 = ₹ 750

**7. **
A man invests ₹ 3,072 in a company paying 5% per annum, when its ₹ 10 share can be bought for ₹ 16 each. Find :

(i) his annual income

(ii) his percentage income on his investment.

**Solution :**

Market value of 1 share = ₹ 16

Nominal value of 1share = ₹ 10

Money invested = ₹ 3,072

∴ No. of shares purchased = 3072/16 = 192

Nominal value of 192 shares = 10 x 192 = ₹ 1,920

Annual income = 5% of ₹ 1,920

= 5/100 x 1920

= ₹ 96

Income % = 96/3072 x 100% = 3.125% 3 1/8 %

**8. **
A man invests ₹ 7,770 in a company paying 5% dividend when a share of nominal value of ₹ 100 sells at a premium of ₹ 5. Find:

(i) the number of shares bought;

(ii) annual income;

(iii) percentage income.

**Solution :**

Total money invested = ₹ 7,770

Nominal value of 1 share = ₹ 100

Market value of 1 share = ₹ 100 + ₹ 5 = ₹ 105

∴ No. of shares purchased = 7770/105 = 74

Nominal value of 74 shares = 74 x 100 = ₹ 7400

Annual income = 5% of ₹ 7400

= 5/100 x 7400

= ₹ 370

Income % = 370/7770 x 100 % = 4.76 %

**9. **
A man buys ₹ 50 shares of a company, paying 12% dividend, at a premium of ₹ 10. Find:

(i) the market value of 320 shares;

(ii) his annual income;

(iii) his profit percent.

**Solution :**

Nominal value of 1 share = ₹ 50

Market value of 1 share = ₹ 50 + ₹ 10 = ₹ 60

Market value of 320 shares = 320 x 60 = ₹ 19,200

Nominal value of 320 shares = 320 x 5 = ₹ 16,000

Annual income = 12% of ₹ 16000

= 12/100 x 16000

= ₹ 1920

Profit % = 1920/19200 x 100 % = 10%

**10. **
A man buys ₹ 75 shares at a discount of ₹ 15 of a company paying 20% dividend. Find:

(i) the market value of 120 shares;

(ii) his annual income;

(iii) his profit percent.

**Solution :**

Nominal value of 1 share = ₹ 75

Market value of 1 share = ₹ 75 – ₹ 15 = ₹ 60

Market value of 120 shares = 120 × 60 = ₹ 7,200

Nominal value of 120 shares = 120 × 75 = ₹ 9,000

Annual income = 20% of ₹ 9000

= 20/100 x 9000

= ₹ 1800

Profit% = 1800/7200 x 100 % = 25%

**11. **
A man has 300, ₹ 50 shares of a company paying 20% dividend. Find his net income after paying 3% income tax.

**Solution :**

Nominal value of 1 share = ₹ 50

Nominal value of 300 shares = 300 × 50 = ₹ 15,000

∴ Dividend = 20% of ₹ 15000

= 20/100 x 15000 = ₹ 3000

∴ Income tax paid = 3% of ₹ 3000

= 3/100 x 3000 = ₹ 90

His net income = ₹ 3,000 – ₹ 90 = ₹ 2,910

**12. **
A company pays a dividend of 15% on its ten-rupee shares from which it deducts income tax at the rate of 22%. Find the annual income of a man who owns one thousand shares of this company.

**Solution :**

Nominal value of 1 share = ₹ 10

Nominal value of 1000 shares = 1000 × 10 = ₹ 10,000

∴ Dividend = 15% of ₹ 10,000

= 15/100 x 10000 = ₹ 1,500

∴ Income tax paid = 22% of ₹ 1500

= 22/100 x 1500 = ₹ 330

His net income = ₹ 1,500 – ₹ 330 = ₹ 1,170

**13. **
A man invests ₹ 8,800 in buying shares of a company of face value of rupees hundred each at a premium of 10%. If he earns ₹ 1,200 at the end of the year as dividend, find:

(i) the number of shares he has in the company.

(ii) the dividend percent per share.

**Solution :**

Total investment = ₹ 8,800

Nominal value of 1 share = ₹ 100

Market value of 1 share = ₹ 110

∴ No of shares purchased = 8800/110 = 80

Nominal value of 80 shares = 80 × 100= ₹ 8,000

Let dividend% = y%

then y% of ₹ 8,000 = ₹ 1,200

⇒ y/100 × 8,000 = 1,200

⇒ y = 15%

**14. **
A man invests ₹ 1,680 in buying shares of nominal value ₹ 24 and selling at 12% premium. The dividend on the shares is 15% per annum. Calculate:

(i) the number of shares he buys;

(ii) the dividend he receives annually.

**Solution :**

Nominal value of 1 share = ₹ 24

Market value of 1 share = ₹ 24+ 12% of ₹ 24

= ₹ 24+ ₹ 2.88= ₹ 26.88

Total investment = ₹ 1,680

∴ No of shares purchased = 1680/268 } = 62.5

Nominal value of 62.5 shares = 62.5 x 24= ₹ 1,500

Dividend = 15% of ₹ 1,500

= 15/100 × 1,500 = ₹ 225

**15. **
By investing ₹ 7,500 in a company paying 10 percent dividend, an annual income of ₹ 500 is received. What price is paid for each of ₹ 100 share ?

**Solution :**

Total investment = ₹ 7,500

Nominal value of 1 share = ₹ 100

No. of shares purchased = y

Nominal value of y shares = 100 x y = ₹ (100y)

Dividend% = 10%

Dividend = ₹ 500

∴ 10% of 100y = ₹ 500

⇒ 10/100 x100y = ₹ 500

⇒ y = 500/100 = 50 shares

∴ Market value of 1 share = 7500/50 = ₹ 150