Aptitude - Stocks and Shares - Discussion

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.

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.

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?

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.

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

I like this explanation. Thanks all for explaining.