Question

Find the market value of a 21/4 % stock, in which an income of Rs.756 is derived by investing Rs.14976, brokerage being 1/4 %.

Answer 1

For an income of Rs.756, investment = Rs.14976
For an income of Rs. 21/4, investment = Rs. (14976/756 * 21/4)= Rs.104
Therefore For a Rs. 100 stock, investment = Rs.104
Hence market value = Rs.(104 - 1/4) = Rs. 103.75

Answer 2

Assume that face value = Rs.100
Dividend per share = Rs.21/4= 5.25 (as it is 21/4% stock)
By investing Rs.14976, earnings = Rs.756
To get an earning of Rs.5.25, investment required = (14976*5.25)/756 = Rs.104
market value of Rs. 100 stock = Rs.(104- 1/4) = Rs.103.75