Aptitude - Stocks and Shares - Discussion

I like this explanation. Thanks all for explaining.

(((9/5)/market value)*20) = (20*12%) so market value will be 15.

Here, He bought at 21.8 and he has to get 12% interest on his investment of 21.8 which means 24.416. Or there must be a disconnect between the two statements.

What I construed from the above explanations was that if the face value is supposed rs. 100 and there is an 9% dividend, and if the market value is rs 90 then the amt of surplus return (that is the interest on market value or the dividend on the face value) should be equal.

In my case, that is rs 9 return on face value should be = rs 9 return on the market value so according to this the interest rate on market value should be 10%.

Am I getting the concept correctly?

It's for @Priyanka who didn't understand the reliance problem and I'm guessing you were talking about the 2nd example of reliance as the 1st one is quite clear in itself.

So, you have a reliance share whose face value is Rs.100 and it is giving a Rs.5 discount on each share it means that the share is trading as 5 rupees less than it's face value and therefore;

Market Value = Face Value - Discount,
Market Value = 100 - 5 = 95.

I believe with this you will get the idea and if your share is trading at a premium then you just add that premium value into the face value to get the market value i.e.

Market Value = Face Value + Premium.

Hope this helps you.

20 rs is the face value of share which invest % dividend implies 1.8 rs on face 20 rs face value for what market value does a person get 12% interest.

Interest formula is:

Earning/Investment (here market value)*100 = 12%.

= 1.8*100/x = 12.

x = 15 rs.

Did not understand reliance problem please explain completely.

First to calculate market value of each share, you must to know what is market value, dividend, what is face value.

Face value is the actual value of share that remains constant thoroughly, dividends so-called annual profit is always calculated on this face value.

For example, I say that the share of reliance is 100 rs and dividend is 5%, then 5 rs profit is distributed to the all share holder as per their share. The only thing you need to remember is that dividend is calculated on FACE VALUE or ACTUAL VALUE.

Now market value, always fluctuated based on company performance. If it may be given on some discount (less than face value), premium (more than face value) or actual face value (both are equal).

Ex. Reliance's share face value is 100 rs, it gives 5 rs. Discount on each share means market value is 95. So rate of interest is calculated always on this market value always.

Direct formula for relation in these term:

Face value*Dividend = Market value*Interest.

= 20*9 = a*12.

a = 15;

It is known that the formula is:

(Dividend / market value) * face value = interest.
or
Dividend / market value = interest / face value.
or
Face value * dividend = market value * interest.

We put it up to this equation, become:
20 * 9% = x * 12%.

(Thanks to @Zohaib! :).
And then we got x = 15.

20 * 9% = x * 12%.
1.8 = x * 12%.
1.8/12% = x.
15 = x.