Question

What is the market value of a 8.5% stock, in which an income of Rs. 341 derived by investing Rs. 3900, brokerage being 3/4%?

Answer 1

Assume that face value = Rs.100
Dividend per share = Rs.8.5 (as it is 8.5% stock)
By investing Rs.3900, earnings = Rs.341
To get an earning of Rs.8.5, investment required = (3900*8.5)/341 = Rs.97.21
market value of Rs. 100 stock = Rs.(97.21- 3/4) = Rs.96.46