Question

What is the market value of a 7.5% stock, in which an income of Rs. 1500 is derived by investing Rs. 5000, brokerage being 3/4%?

Answer 1

Assume that face value = Rs.100
Dividend per share = Rs.7.5 (as it is 7.5% stock)
By investing Rs.5000, earnings = Rs.1500
To get an earning of Rs.7.5, investment required = (5000*7.5)/1500 = Rs.25
market value of Rs. 100 stock = Rs.(25- 3/4) = Rs.24.25