Question

What is the market value of a 8.5% stock, in which an income of Rs. 3400 is derived by investing Rs. 45000, 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.45000, earnings = Rs.3400
To get an earning of Rs.8.5, investment required = (45000*8.5)/3400 = Rs.112.5
market value of Rs. 100 stock = Rs.(112.5- 3/4) = Rs.111.75