QQuestion
Mr Gupta invested ₹33,000 in buying ₹100 shares of a company at 10% premium. The dividend declared by the company is 12%.
Find:
(a) the number of shares purchased by him.
(b) his annual dividend.
✓Answer
Money invested = ₹33,000
Nominal value of each share = ₹100
Premium = 10%
Premium on each share = \frac{10}{100} × ₹100
⇒ Premium on each share = ₹10
Market value of each share = Nominal value + Premium
⇒ Market value = ₹100 + ₹10
⇒ Market value = ₹110
(a) Number of shares = Money invested/Market value per share
⇒ Number of shares = \frac{33000}{110}
⇒ Number of shares = 300
(b) Dividend on one share = \frac{12}{100} × ₹100
⇒ Dividend on one share = ₹12
Annual dividend = 300 × ₹12
⇒ Annual dividend = ₹3,600
Therefore, 300 shares were purchased and the annual dividend is ₹3,600.
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