Aptitude - Stocks and Shares - Discussion

Please any body explain this pblm?

How 12 Rs is an income on Rs. 100. Any one explain this problem?

He ask from 12% of the money. So you have assume for the amount 100. Because % means 100.

I have some doubt about this prob. No prob with the calculation part. Its clear how we get 15 through the calculation.

The man wants 12% interest on his money. He invested Rs 20 (i.e. Price of the share when he bought it). If he wants 12% on his money he should get a return of Rs 22. 4 (i.e 12% of 20). But he got Rs 1. 8 (i. E 9% dividend for Rs 20). So still he has to get Rs 0. 6. So the share price should be Rs 20. 6 in order to get the amount Rs 22. 4. Round off the fig take the current share price as Rs 21.

In other words if the present share value is Rs 15 (according the answer and calculation) and the share value is Rs 20 when he bought it, he is getting a loss or depreciation of Rs 5. Then how can he get 12% interest on his money.

So from these points according to me the share value should be more than 20 as he got only 9% dividend and he is expecting 12% interest on his money. Only one option is more than 20 or we can get it through the calculation I have told earlier.

If my consideration is wrong kindly guide me through this. Thanks in-advance.

Stock with a Face Value of Rs.20 is yielding 9% divident and is trading at Rs.X.
What is the Value of Rs.X is the Question?

Earning on Rs.1.8/x=12%; x = Rs.15.

How can you multiply interest rate with dividend to find out market value. Does it has any formula? if not please explain me calculations step by step.

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

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.

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;

Did not understand reliance problem please explain completely.