Chapter 32

32
Introduction
1. Stock
Stock is the name given to the money borrowed by
any Government, or to the capital of a Trading Company.
Suppose the Government of India wants to raise a
loan of Rs 100,00,000 to meet the expenses of the plan. It will
issue bonds or promissory notes of say Rs 100 each and offer
them for sale. By these bonds the Government undertakes to
pay a fixed rate of interest (say 10%) to the holders of the
notes. The interest is generally paid half-yearly.
I f a man purchases a bond of Rs 100, he would be said
to hold Rs 100 stock, and this stock would secure to him the
right of receiving every six months the sum of Rs 5 as interest.
Suppose the Government promises to pay off the principal of the bond in the year 2000, but the holder of the note,
owing to change in his circumstances, wants the money before the year. Certainly he cannot claim repayment from the
Government. What should he do then? He can sell his stock
to some other person, whereby his claim to interest is transferred to that person.
The cash value of stock does not remain constant, it
varies from time-to-time owing to political and commercial
causes. I f the current rate of interest is less than 10%, the
investment free from risk and the number of people desrious
of becoming investors large, then the holder of Rs 100 stock
can sell it for more than Rs 100. On the other hand, if the
current rate of interest is greater than 10%, or if the investment is not considered free from risk, this Rs 100 stock would
have to be sold for a sum less than Rs 100.
If the selling price of Rs 100 stock is exactly Rs 100
cash, the stock is said to be at par.
I f the selling price of Rs 100 stock is more tha Rs 100
cash, the stock is said to be at a premium or above par.
If the selling price of Rs 100 stock is less than Rs 100
cash, the stock is said to be at a discount or below par.
Stock is usually bought and sold through a broker
who generally charges 1 per cent on the stock bought or
sold. Thus, if the market value ofRs 100 stock is Rs 105, the
Stocks and Shares

buyer has to pay Rs (105 + 1) and the seller receives
Rs(105-1).
2. Share
The convenient unit in which the capital stock of a
joint stock company is divided, is called a share. These shares
are generally worth Rs 10 and Rs 100 each. The company
raises its capital by means of such shares.
3. Company, Joint Stock Company and Paid-upcapital

Suppose a new factory is to be started for automobile
manufacture, and it is estimated that a sum of Rs 10000000 is
required to carry out the project. It may be beyond the power
of one or two persons to provide all this money. A Joint
Stock Company is then formed in the following way: The
persons interested in the project, issue a prospectus explaining the proposal and inviting the public to subscribe. They
divide the required capital into small parts called shares, which
may be of any value. Each person who purchases one or
more shares is called a shareholders. The whole body of the
shareholders is called the Company.
I f the whole capital of the company is divided into
1000000 shares, the value of each share would be Rs 10,
Since the construction of the factory cannot be completed in
a month or a year, the whole amount, viz., Rs 10000000 is not
required at once. The company therefore might ask its shareholders to pay at first only Rs 7 cash on each share and the
remaining Rs 3 when called upon. Rs 7000000 thus raised
would be called the paid-up capital of the company.
4. Dividend
Now suppose the factory is complete. It sells automobiles and thus earns money. Part of the income is used in
paying working expenses, and the remainder is divided
amongst the shareholders. Profits divided amongst the shareholders are called dividends.
5. Face Value and Market Value

The original value of a share is called its Nominal
726
P R A C T I C E B O O K ON Q U I C K E R MATHS
Value, Face Value or Par Value. This value is printed on the

share certificate. The price of a share at any particular time is
called its Market Value ie the value at which a share is available in markets.
value may now be equal to or greater than or less than

Rs500.
Sometimes a stock is named by means of the rate of
interest it pays. Thus the expression "5 per cent at 95"
refers to some company's stock which pays a dividend
of Rs 5 on every Rs 100 stock and further states that
each Rs 100 stock can be purchasedfor Rs 95. If a man
buys Rs 100 stock by paying Rs 95 cash, he will be
entitled to receive Rs 5 as interest. In other words he will
get a dividend of Rs 5 on an investment of Rs 95.
7.
6. Different kinds of shares.

Shares are of two kinds:
(a) Preference Shares: On these shares a fixed rate of
dividend is paid to their holders, subject to profits of
the company.
(b) Ordinary or Equity Shares: The holders of these
shares receive dividend only after the holders of preference shares have received their share of dividend.
The rate of dividend to Equity shareholders varies
with the profit of the company.
Generally a company issues a combined certificate to
the shareholder for the number of shares held by him. Thus a
person who holds 2000 shares of a company of the face value
of Rs 10 each, is said to hold a stock of Rs 20000 in the
company.
7. Relation between Face Value and Market Value

(i) If the market value = face value, then share is at par
(ii) If the market value > face value, then share is at premium or above par.
(iii) If the market value < face value, then share is at discounter below par.
8. Debentures
When a company likes to borrow money from the
share holders or public for a fixed period at a fixed rate of
interest the company issues debentures. So debentures are a
debt of a company.
11. Methods for Solving Problems on Stock

Let us consider an example,
Rs 6000,5% stock at 8 premium, brokerage 2%
Here, Rs 6000 = Amount of stock
5% = Rate per cent per annum
Rate per cent per annum indicates income of stockholder. (See the definition of stock)
This means that on investing Rs 100 + 8 (Market
Value), annual income = Rs 5
8 = Premium at Market Value
(a)
When stock is at premium sale,
Market value = 100 + Premium
(b)
When stock is at discount sale,
Market value = 100 - Discount
2% = Brokerage or Broker's commission
[During purchase o f stock, brokerage is added to
Market Value and during sale of stock, brokerage is
subtracted from Market Value]
(i)
When Purchase Cost and Sale Realisation is to be
calculated, data of rate per cent per annum is not
required,
(a) Purchase cost
9. Stock Exchange, Share Brokers & Brokerage
Market Value + Brokerage
Shares and Debentures are generally sold or purchased in a market known as stock exchange through
authorised persons known as Share Brokers or Brokers.
Brokers's commission is called 'Brokerage'.
Brokers charge commission from the purchasers and
also from the sellers. Brokerage is calculated on market value
of shares of debentures.
100
(b) Sale Realisation
Market Value - Brokerage
2.
3.
4.
5.
6.
A debenture-holder receives interest on the face value

of debentures at a fixed rate of the company. The interest doesnot vary.
Dividend on share is calculated on face value.
Interest on debentures is calculated on face value
Share purchaser has to pay (Market Value + Brokerage).
Share-seller will get (Market Value - Brokerage).
In solving questions, the aspirants should make a clear
distinction between cash and stock. 'Rs 500' means Rs
500 cash whereas 'Rs 500 stock' means an amount of
stock which originally cost Rs 500, but whose market
x Amount of stock
100
Amount of Stock
Sale Re alisation
100
(c)
10. Note
1.
x Amount of stock
PurchaseCost
(ii)
When Annual Income and Investment is to be calculated data of rate per cent of stock is required.
(a) Annual Income
Amount of Stock
= Per cent rate of stock *
100
Purchase Cost
% rate of stock *
727
Stocks and S h a r e s
(vii)
v Amount of stock =
Income (Dividend Earned)
Purchase Cost
-xlOO
Per cent rate of dividend
"Too
Investment
= % rate of stock *
Face Value x Number of shares
[ v Purchase Cost = Total Investment]
'
or
Annual Income
per cent rate of stock
Investment
Income
%rate of dividend
Investment
100
Face Value
Market Value (1 - %Brokerage)
(b) Actual Rate per cent on Investment

(viii)
per cent rate of stock
Actual Rate per cent on Investment
-xlOO
Annual Income
-xlOO
Investment
12.
Methods For Solving Problems on Shares

and Debentures
All the formulae on shares are also applicable for debentures. Always remember the following points.
(i)
Per cent rate of dividend is calculated on Face Value.
(ii)
Per cent Brokerage is calculated as per cent of Market
Value.
(iii)
Per cent Brokerage is added to Market Value during
Purchase.
(iv)
Per cent Brokerage is deducted from Market Value
during selling.
(v)
For one share
(a) Purchase value = Market Value (1 + % Brokerage)
(b) Sale Value = Market Value (1 - % Brokerage)
(c) If the share is at par,
Market Value = Face Value
(d) If the share is at premium,
Market value = Face value + Premium
(e) If the share is at discount,
Market value = Face Value - Discount
(vi)
For 'n' member of shares
(a) Investment = Number of shares x Purchase Value
of one share
Investment
;. Number of shares =
Sale Realisation
SaleValueof
To find the cost of purchase when amount of stock and

market value and brokerage are given.
Cost of purchase
= Amount of stock x
100
Illustrative Example
Ex:
Find the cost of Rs 4500, 8% stock at 80.
Soln: Applying the above formula, we have
the cost of purchase = 4500 x
80
100
Rs3600
Amount of stock = Rs 4500 and

Market Value = Rs 80
Here the value of Rate percent is has not
been used.
Note: Here brokerage is not given, therefore we take the
value of brokerage = 0.
\
Exercise
1.
3.
oneshare
4.
(b) Number of shares
Investment
Rule 1
2.
Number of shares =
Income x 100
By Now, we hope that you must have been well acquainted with the basic of stocks and shares. Now consider
the Rules with Illustrative Examples and Exercises discussed
in the following pages.
Purchase Value of one share
Similarly,
Dividend % x Face Value

Market Value (] + % Brokerage)
What is the cost of Rs 5400, 9 per cent stock at 90?

a)Rs4680
b)Rs4860
c)Rs4660
d)Rs4870
Find the cost of Rs 1000 stock at 95.
a)Rsl00
b)Rs950
c)Rs500
d)Rs850
Find the cost of Rs 2600 stock at 105
a)Rs2730
b)Rs2370
c)Rs2750
d)Rs2760
Find the cost of Rs 5750 of 3% stock at 104.
a)Rs5890
b)Rs5950
c)Rs5980 d) None of these
Investment
Market Value (1 + % Brokerage)
Sale Re alisation
Market Value{\- % Brokerage)
5.
Find the cost of Rs 12600 Railway stock at 150 - (dividend 5 - % )

2
728
6.
7.
8.
9.
a)Rs 18963 b)Rs 19863 c)Rs 18933 d) None of these

How much stock at 105 can be purchased for Rs 1433.25?
a)Rsl365
b)Rsl635
c)Rsl355 d)Noneofthese
How much stock can be purchased for Rs 7350 at 105?
a)Rs7500
b)Rs7000
c)Rs7200
d)Rs6800
How much stock can be purchased for Rs 794.50 at 112.5
(Brokerage 1)?
a)Rs650
b)Rs485
c)Rs706
d)Rs700
How much must I pay for Rs 1365 stock at 104? (Brokerage \%y
a)Rs 1433.50
b)Rs 1344.25
c) Rs 1433.25
d) None of these
10. Find the^ost of Rs 15000, 5 - % , stock at 99 (Brokerage

1>
7
a) Rs 15000
c)Rs 13000
b) Rs 12500d) None of these
Answers
l.b
2.b
5. a;
301
Hint: Required answer = 1 2 6 0 0 x Rs 18963.
6. a;
3.a
4.c
1
105
Hint: 1433 = Amount of stock x 4
100
amount of stock =
100x14334_ = R$ 1365.
105
2.
3.
4.
Answers
l.a
8. d;
2.b
3.a
4. a
Rule 3
To find the cost ofpurchase when amount of stock and the
value of premium are given.
Cost ofpurchase = Amount of stock x
100+ Premium
Ex:
Find the cost of Rs 1000, 7% stock at 5 premium.
the cost of purchase = ' 000
100 + 5
x
100
= Rs 1050.
Exercise
1.
2.
7. b
112.5 + 1
Hint: Rs 794.50 = x Amount of stock
a)Rs4680
b)Rs4860
Find the cost of purchase of Rs 15760, 8% stock at par.
a) Rs 15670 b)Rs 15760 c)Rs 15750 d)Noneofthese
a)Rs6000
b)Rs5500
c)Rs4500
d)Rs5600
How much stock can be purchased for Rs 10000 at par?
a) Rs 10000
b)Rs 12000
c) Data inadequate
d) None of these
4.
Find the cost of Rs 500, 5% stock at 6 premium.

a)Rs530
b)Rs630
c)Rs560
d)Rsl060
Find the cost of Rs 6500,3% stock at 2 premium.
a)Rs6330
b)Rs6630
a)Rs6322
b)Rs6352
c)Rs6342
d)Rs6642
a)Rs5668
b)Rs5886
c)Rs5776
d)Rs5996
Answers
9. c;
794.50x100
.-. Amount of stock =
,,, .
= Rs 700.
11 J.5
l.a
Hint: Required answer
To find the cost of purchase when amount of stock and the

value of discount are given.
= Rs 1365 x (104 + 1 ) _ 1365 x105 = Rs 1433.25.

100
100
10.
2.b
4.b
Rule 4
Cost ofpurchase - Amount of stock x
Rule 2
To find the cost ofpurchase when amount of stock is given
and the stock is at par.
Cost of purchase = Amount of stock
Ex:
Find the cost of purchase of Rs 1000; 8% stock at 10

discount.
100-10
Ex:
Find the cost of purchase of Rs 4500,8% stock at par.
the cost of purchase = Amount of stock = Rs 4500.
Exercise
100- Discount
1.
3.c
the cost of purchase = lOOOx = R 900.

S
Exercise
1.
Find the cost of purchase of Rs 500; 3% stock at 5 discount.

a)Rs475
b)Rs675
c)Rs575
d)Rs875
729
Stocks and Shares

2.
Find the cost of purchase of Rs 650; 6% stock at 4 discount.

a)Rs684
b)Rs624
c)Rs724
d)Rs644
3.
Rule 6
Tofind the cost ofpurchase when amount ofstock, value of
premium and brokerage are given.
Cost of purchase
Find the cost of purchase of Rs 945; 7% stock at 6

100+ Premium + Brokerage
discount.
a)Rs888
= Amount of stock x
b)Rs333.8
c)Rs888.3
Answers
l.a
2.b
Ex:
3.c
To find the cost of purchase when amount of stock and

brokerage are given. An another condition that the stock is
at par is given.
Cost of purchase = Amount ofstock x
Find the cost of Rs 2000,5% stock at 5 premium (bro1
Rule 5
kerage
n /
/ o

the purchase cost = 2000 x
100 +Brokerage
100 + 5 + = Rs 2110.
100
700
Exercise
Ex:
100
d)Noneofthese
Find the cost of purchase of Rs 1000,4% stock at par
1.
Find the cost of Rs 1000, 5% stock at 10 premium (brokerage 1%)

a)Rslll0
b)Rs2110
c ) R s l l 2 0 d) None of these
brokerage%
10

the purchase cost
100 +
10
lOOOx100
2.
Find the cost of Rs 2500,4% stock at. 4 premium (brokerage ^" )

0/
= 1 0 x
]0?I=Rsl001.
10
a)Rs2526
b)Rs2825
c)Rs2625
d)Rs3025
_1
Exercise
3.
1.
Find the cost of Rs 2400,7% stock at 7 premium (bro-
Find the cost of purchase of Rs 5000, 4 % stock at par

kerage 1 % )
f
1
brokerage%
a)Rs2676
b)Rs2616
c)Rs2636
d)Rs2606
Answers
2.
a)Rsl001
b ) R s l l 0 0 c)Rs5010
d)Rsl010
Find the cost of purchase of Rs 6000, 5% stock at par
(brokerage%
a)Rs!001
3.
b)Rs6010
c)Rs5001
d)Rsl010
2
Find the cost of purchase of Rs 800, 3% stock at par
l.a
2.c
3.b
Rule 7
To find the cost ofpurchase when amount of stock, value of
discount and brokerage are given.
Cost of purchase
=Amount of stock x
100 - Discount
100+ Brokerage
Ex:
Find the cost of purchase of Rs 2000, 5% stock at 4

discount (brokerage ^ )
0 /
brokerage%

a)Rs 101
c)Rs810
b)Rs801
d) None of these
the purchase cost = 2000 x
Answers
l.c
2.b
3.b
100-4 +
100
Rs 1930.
730
Exercise
Ex:
1.
Find the cost of purchase of Rs 1500, 4% stock at 4
How much stock should be sold to realise Rs 1144

from 6% stock at 5 premium (brokerage 1%)
discount (brokerage % )
2.
3.
a)Rsl440
b)Rsl425
Find the cost of purchase
discount (brokerage 1%)
a)Rsl375
b)Rs2475
Find the cost of purchase
discount (brokerage 1 %)
a)Rsl363
b)Rsl263
1 1 4 4
the amount of stock =

c)Rsl420 d) None of these
of Rs 2500, 7% stock at 6
c)Rs2375
d)Rs2365
of Rs 1450, 8% stock at 7
2.
2.c
How much stock should be sold to realise Rs 1050 from

8% stock at 6 premium (brokerage 1%)
a)Rsl000
b)Rs950
c)Rs850
d)Rs995
7% stock at 4 premium (brokerage ^" )
0//
3.a
3.
Rule 8
To find the Sale Realisation when Amount of Stock, Brokerage and Premium are given.
Sale
100 + Premium - Brokerage
Realisation
a)Rsl750
b)Rsl700 c)Rsl695
d)Rsl750
8% stock at 7 premium (brokerage 1%)
a)Rsl400
b)Rsl450 c)Rsl500 d) None of these
Answers
l.a
2.b
3.c
100
Rule 10
Amount of stock
Ex:
Find the cash realised by selling Rs 1500,4% stock at

6 premium (brokerage 1%)
the Sale Realisation
100 + 6 - 1
105
-xl500
:1500 =Rsl575.
100
100
Exercise
1.
d)Rsl563
Answers
l.a
Exercise
1.
c)Rsl364
; ; 100 = R n 00.
100 + 5 - 1
Find the cash realized by selling Rs 2400, 5% stock at
To find the Sale Realisation when Amount of stock, Brokerage and Discount are given.
Sale Realisation
=
100 - Discount - Brokerage

x Amount of stock
100
Ex
Find the cash realised by selling Rs 1500,4% stock at

6 discount (brokerage 1%).
100-6-1
-x 1500 = R 1395.
Sale Realisation =
100
s
5 premium (brokerage ~ % )
2.
Exercise
a)Rs2514
b)Rs2516
Find the cash realized by selling Rs 1400, 5% stock at
4 premium (brokerage ^" )
0/
a)Rsl556
b)Rsl456 c)Rsl256
d)Rsl656
3. Find the cash realized by selling Rs 1600,4% stock at 11
premium (brokerage 1%)
*
a)Rsl760
b)Rsl670 c)Rsl560 d) None of these
1.
2.
3.
Answers
l.a
2.b
Find the cash realised by selling Rs 1400, 7% stock

at 4 discount (brokerage 1%).
a)Rsl330
b)Rsl430 c)Rsl320
3.a
Rule 9
To find the amount of stock when sale realisation, premium and brokerage are given.
Sale Realisation
Amount of stock = T^T 7,
:
;
xlOO
100+ Premium - Brokerage
J
Find the cash realised by selling Rs 1450, 5% stock at 5

discount (brokerage 1%).
a)Rsl563
b)Rsl463
c)Rsl363
d)Rsl545
Find the cash realised by selling Rs 1680,4% stock at 7
discount (brokerage 1%).
a) Rs 1545.5 b)Rs 1545.6 c)Rs 1544.6 d)Rs 1455.6
d)Rsl340
Answers
l.c
2.b
3.a
Rule 11
To find the amount of stock if sale realisation, discount
and brokerage are given.
731
Stocks and Shares

investing Rs 1940 (brokerage 1%).
a)Rs2050
b)Rsl960
c) Rs 2000
d) None of these
Sale Realisation
-xlOO
Amount of stock
100- Discount - Brokerage
Ex.:
How much stock should be sold to realise Rs 1128

from 6% stock at 5 discount (brokerage 1%).
1128
the amount of stock =
xlOO = R 1200.
3.
by investing Rs 1425 (brokerage 1/2%).

a)Rsl550
b)Rsl560
c)Rsl500
d)Rsl620
Answers
100-5-
1. a;
Exercise
2.

5% stock at 4 discount (brokerage 1%).
a)Rsl500
b)Rsl450
c)Rsl550
d)Rsl600
a)Rsl650
b)Rsl550
c)Rsl600 d) None of these
8% stock at 8 discount (brokerage
a) Rs 2800
b)Rs2900
c)Rs2700
Hint: In the given formula, we put Market Value ie 95

in place of (100 - discount), in this case. Therefore
applying the given rule we have the required answer
1905
100 =Rs2000.
95 + 2.c
4% stock at 6 discount (brokerage 1%).
3.
How much 8% stock at 5 discount can be purchased
j.c
Rule 13
To find the Amount of Stock when Purchase Cost or Total
Investment, Premium and Brokerage are given.
Amount of stock
Purchase cost or Total Investment
d)Rs2850
100 + Premium + Brokerage
xlOO
Answers
l.a
2.c
3.a
Ex:
Rule 12
To find the amount of stock when purchase cost or total
investment, discount and brokerage are given.
How much 5% stock at 6 premium can be purchased

by investing Rs 1284 (brokerage 1%).
1284
the amount of stock
Purchase Cost or Total Investment

-xlOO
Amount ofstock=
- >cor + Brokerage
Ex:
amount of stock =
1.
How much 4% stock at 4 premium can be purchased by

investing Rs 1785 (brokerage 1%).
a)Rsl650
b)Rsl750
c)Rsl700
d)Rsl600
2.
by investing Rs 1537 (brokerage 1/2%).

a)Rsl400
b)Rsl450 c)Rsl500
d)Rsl475
Exercise
3.
1.
Exercise
950
-xlOO = R 1000.
100-6 + 1
Hence stock being at 6% discount, by investing Rs

950, one can purchase stock of Rs 1000, which is more
than Rs 950.
xlOO = R 1200.
100 + 6 + 1
Hence stock being at 6 premium, by investing Rs 1284,

one can purchase stock of Rs 1200 which is less than
Rs1284.
1 0 0
How much 5% stock at 6 discount can be purchased

by investing Rs 950 (brokerage 1%).
How much 4% stock at 95 can be pruchased by inby investing Rs 1934.5 (brokerage 1% ).

a)Rs!825
vesting Rs 1905, (brokerage %y?
2.
a)Rs2000
b)Rs2500
c)Rs2200
d)Rs2350
How much 6% stock at 4 discount can be purchased by
b)Rsl850
Answers
l.c
2.b
3.a
c)Rsl875
d)Rsl900
732
Rule 14
To find the Annual Income if amount of stock and per cent
rate of stock are given.
Annual Income = Amount of Stock
Soln: Here, total investment is given as Rs 7500. But amount

of stock purchase is not known. Hence, we apply the
above formula,
7500
'% Rate of stock\
Annual Income = ~ 7 ^ ~
100
Ex:
Find the annual income derived from Rs 7500, 4%

stock at 125.
2.
[j ^ " I
'
1.
2.
ii;
What income will be derived from Rs 3275 of 11 % stock?

a) Rs 360.50
b)Rs 350.25
c) Rs 360.25
d) None of these
What income will be derived from
(i) Rs 10000 of 9.5 per cent stock?
a)Rs950 b)Rsl000
c)Rs900
d)Rsl050
(ii) Rs 4205 of 10 per cent stock?
a)Rs430 b)Rs420
c)Rs 430.5 d)Rs 420.5
3.
4.
5.
(i ii) Rs 7740 of 11 ^ per cent stock?
3.
a)Rs890.01
b)Rs809.10
c)Rs890.10
d) None of these
What income will be derived by investing Rs 3000 in
b) Rs 825
d) None of these
Answers
1. c;
2. (i)a
Hint: Income = 3275 x

(ii)d
6.
1547
Hint: Required answer =
2. b
3. c;
Hint: Applying the given rule we have,
13 =Rsl69.
= R 360.25
s
400 = x 10
102
or, =
x
Rule 15
To find the annual income if Total Investment, per cent
Rate of stock and Market value are given.
' Total Investment ^
x % Rate of stock
Market Value
=102x40 =Rs4080.
5.c
6. a
Rule 16
To find Annual Income if per cent rate of stock, total investment, premium and brokerage are given.
Annual Income
Investment
x per cent rate of stock
100 + Pr emium + Brokerage
Find the annual income derived by investing Rs 7500,
in 4% stock at 125.
10
=Rs285.
4. a
Ex:
What sum invested in a 13% stock at 121 will pro2

2
duce an income of Rs 100?
a)Rs900
b)Rs850
c)Rsl050
d)Rs950
1. c;
(iii)c
Annual Income =
What sum of money must a lady invest in a 10%
Answers
19
3. a;
What annual income will be derived by investing Rs

1547 in 13 per cent Railway stock at 119?
a)Rsl89
b)Rsl79
c)Rsl69
d)Rsl59
1
3
10 per cent stock at 86?
2
4
a)Rs520
b)Rs420
c)Rs450
d)Rs460
Find what sum of money I must invest in a 10 per cent
stock at 102 to obtain an income of Rs 400 per year.
a)Rs4800
b)Rs8040
c)Rs4080
d)Rs8400
Find what sum of money I must invest in a 9% stock at
102 to obtain an income of Rs 300 per year.
a)Rs3400
b)Rs3600
c)Rs3450
d)Rs3540
stock at 120 to get an income of Rs 63?

a)Rs750
b)Rs780
c)Rs720
d) None of these
9 per cent stock at par?

a)Rs285
c)Rs385
=Rs240
Exercise
Exercise
1.
x 4
[Note: Rs 125 is Market Value of the stock]
the Annual Income =
Ex:
Find the annual income derived by investing Rs 2100
Stocks and Shares
733
in 5% stock at 4 premium (brokerage 1 % ) .

the Annual Income
7% stock at 9 discount (brokerage 1 %)

a)Rsl05
b)Rsl50
c)Rsl20
d)Rsl70
Answers
2100
. 2100 .
x5 = R s l 0 0 .
100 + 4 + 1 x 5 = 105
1900
1. a;
Hint: Required income
2.d
[Here value of brokerage is 0]

3.a
Exercise
1.
Rule 18
12 per cent stock at 5 premium?
2.
3.
a) Rs 282.25
b)Rs 282.50
c)Rs 382.50
d) None of these
Find the annual income derived by investing Rs 5300 in
4% stock at 5 premium (brokerage 1%).
a)Rsl00
b)Rsl50
c)Rs250
d)Rs200
To find the actual rate %, if per cent rate of stock, discount

and brokerage are given.
% rate of stock
-xlOO
Actual Rate per cent = "777 77~1> 7
J 00 Discount + Brokerage
r
Ex.:
What rate per cent is obtained by investing in 5%
-7
9% stock at 7 premium (brokerage % ) .
1
a)Rsl80
stock at 5 discount (brokerage % )
b)Rs90
x8 = R 160
S
100-5 + 0
c)Rs200
Soln: Applying the above formula we have
d)Rsl60
Actual rate % =
Answers
3150
51
100 + 5 + 0
1. c;
Hint: Required income =
2.d
[Note: Here value of brokerage is 0.]

3. a
Rs 382.50
5
100-5 + 0.5
xl00 = ^ - =5.23%
Exercise
1.
What rate of interest is obtained from investing in 8
per cent stock when the quoted price is 6.5 per cent
below par?
Rule 17
To find Annual Income, if per cent rate of stock, total investment, discount and brokerage are given.
Annual Income
2.
Investment
100 - Discount + Brokerage * ^ *
ra
*v
i 7
b ) 9
TT
c ) 1 1
9~
d ) 1 0
9~

4
per cent stock when the price is at a discount of 12 per
Ex.:
Find the annual income derived by investing Rs 950

in 5% stock at 6 discount (brokerage 1%)
the annual income
950
950
=
5 =
x5 =Rs50
100-6 + 1
95
M
3.
cent?
a) 12%
b) 10%
c)8%
d)16%
What rate % is obtained by investing in 7% stock at 5
discount (brokerage ~
a) 7.35%
Exercise
Answers
1.
1. b;
2.
What income will be derived by investing Rs 1900 in 8

per cent stock at 5 discount?
a)Rsl60
b)Rsl50
c)Rsl00
d)Rsl80
6% stock at 7 discount (brokerage ^ )
0//
3.
a)Rsl80
b)Rsl44
c)Rsl26
d)Rsl08
Find the annual income derived by investing Rs 13 80 in
b)7.55%
c)7.05%
d)8%

17
=
2. b
3. a;
17
1
^xl00 =
xl00 = 9 %
2(100-6.5)
187
11

7
100-5 + 0.25
100 = 7.349 a 7.35%(Appro\.)
734
Rule 19
Rule 20
To find the actual rate per cent, if per cent rate of stock,
premium and brokerage are given.
To find the Market Value if per cent rate of stock, annual

income total investment and brokerage are given.
Actual rate per cent =
% rate of stock
^
r e m i u m +
B r o k e r a g e
Investment x % rate of stock
xlOO
Market value =
Ex.:
Ex:
What rate per cent is obtained by investing in 5%
Brokerage
Annual Income
Find the market value of a 6% stock in which an income of Rs 244 is derived by investing Rs 1220, bro-
stock at 5 premium (brokerage % )
kerage being %.
4

the actual rate %
100 + 5 + 0.5
x l 0 0 = =4.74%.
105.5
the Market Value =
1220x6
4
244
= 30- 0.25 = Rs 29.75.
Exercise
Exercise
1.
1.
per cent at par?

1
a) 9 - %
2.
1
b) 8 - %
2
c)18y%
2.
d) None of these
3.
4 ~ % stock at 96 (brokerage ^ % ) .
per cent stock when the quoted price is 14 per cent above
par?
1
a) 8 - %
J
3.
7
b) 8 - %
1
c) 9 - %
d) Data inadequate
What rate of interest is obtained from investing in

.,3
12
per cent stock when the price is at a premium of 2
per
cent?
a) 25%
b)8^-%
c) 1 2 ^ %
2.
What is the annual income derived from Rs 1800, 5%

stock at 100?
a)Rs90
b)Rsl00
c)Rsll0
d)Rs95
What is the annual income by investing Rs 3000 in 6%
stock at 120?
a)Rsl50
b)Rsl00
c)Rs200
d)Rs250
a) Rs 56
c)Rs39
d)Rs36
Answers
l.a;
,
1800x5
Hint: 100 =
o r
1800x5
x = - = 90
10
.-. required answer = Rs 90

2.a;
Hint: 120=
M ^ _
d)ll|%
x
Answers
1. a;
b)Rs46
3000x6
.
=Rs 150.
D
120
Hint: Actual rate per cent

770x-
770 x-
3. d;
2. a;
*
xlOO = 9 - %
100 + 0 + 0
2
Hint: Actual rate per cent
3. c;
1
9=
100 + 14 + 0
or,
Rs36
96 + 4
Rule 21
x l 0
0 = ~ = 8-%
3
3
25
1
, x l O O = - = 1 2 - %
4x(l00 + 2) + 0
2
2
51
Hint: 96 ;
To find the Total Investment if% rate of stock, market value

and annual income are given.
Annual Income* Market Value
Total Investment =
% rate of stock
3.
735
Stocks and Shares

Exercise
Ex:
1.
How much should one invest in 7% stock at 147 to

secure an annual income of Rs 250.
Investment =
250x147
~
= Rs 5250
Find what a purchaser would have to pay for 250 shares

of Rs 8 each quoted at Rs 12. What would be the gain to
the share-holder, i f he had purchased the share at par'.'
a)Rsl000
b)Rsl200
c)Rs950
d)Rsl050
of Rs 12 each quoted at Rs 21. What would be the gain
to the share-holder, i f he had purchased the share at
par?
a)Rs3500
b)Rs3575
c)Rs3600
d)Rs3675
of Rs 6 each quoted at Rs 15. What would be the gain to
the share-holder, if he had purchased the share at par?
a)Rs4050
b)Rs4500
c)Rs4060
d)Rs3950
What profit is made by selling 60 shares of Rs 50 each,
when they are quoted at Rs 65.60?
a)Rs930
b)Rs830
c)Rs950
d) None of these
2.
Note: If % rate of stock at discount or at premium with brokerage is given, we can calculate total investment by
using the formula given below.
Annual Income
Total Investment
% Rate of stock
Market Value + % Brokerage
3.
Market Value = 100-Discount and 100 +Premium.

4.
Exercise
1.
2.
3.
How much should one invest in 8% stock at 147 to secure an annual income of Rs 560.
a) Rs 12090 b)Rs 10290 c)Rs 10270 d)Noneofthese
a)Rs3900
b)Rs3850
c)Rs4900
d)Rs3950
a)Rs3000
b)Rs2500
c)Rs2800
d)Rs2900
Answers
l.a
2.a
3.a
4.a
Rule 23
To find sell realisation if market value, total investment or
purchase cost of stock and brokerage are given.
Sale realisation = Purchase cost or Investment
Answers
l.b
2.c
3.a
Rule 22
To find the gain to the shareholder if theface value and the
market value of the shares are given.
Gain to the shareholders = Total no. of shares (Market
Value - Face Value)
Ex:
A man invests Rs 4220 in 6 - % stock at 105. On

2
selling the invested stock, how much will he realise?
Find what a purchaser would have to pay for 300
shares of Rs 10 each quoted at Rs 25. What would be
the gain to the share-holder, if he had purchased the
share at par?
Soln: Detail Method:
Face value of 1 share = Rs 10
Market value of 1 share = Rs 25
Amount paid by the purchaser to share-holder
= 300x25 = Rs7500
According to the question,
if share-holder had purchased the shares at par then
the purchase cost by share-holder
= 300x 10 =Rs3000
.-. Gain by the share-holder
= Rs 7500 - Rs 3000 = Rs 4500.
Quicker Method: Applying the above theorem, we
have,
Gain to the share-holder = 300 (25 - 10) = Rs 4500.
Ex:
1'
Brokerage %

(105-0.5
Sale realisation = 4220
105 + 0.5
(104.5 ^1
= 42201
105.5 J
= Rs4180
Note: I f discount or premium is given, then put the market
value = 1 0 0 - discount or 100 + premium respectively
into the above formula.
Exercise
1.
A man invests Rs 1272 in 7% stock at 104.5. On selling

the invested stock, how much w i l l he realise?
I Brokerage 1%
2
2.
a)Rsl236
b ) R s l l 3 6 c)Rsl026
d)Rsl226
A man invests Rs 1070 in 5% stock at 106. On selling the
invested stock, how much will he realise? Brokerage 1%
736
3.
a)Rsl030
b)Rsl050
c)Rsl025
d)Rsl035
A man invests Rs 3020 in 6% stock at 150. On selling the
invested stock, how much will he realise? Brokerage 1%
a)Rs2980
b)Rs2890
c)Rs2990
d)Rs2880
2. a;
2.b
4 4
2 5
+ + J = Rs 1331 (See
5
Note of the given Rule)

.-. Investment made = Rs 1331.
Now, face value of 1 share = Rs 25.
.-. Face value of 44 shares = Rs (44 x 25) = Rs 1100.
Answers
l.a
Hint: Cost of shares =
3.a
Rule 24
Theorem: Purchase cost of n shares of Rs 'S' each at 'x'
discount, brokerage being y'per share, is given by Rs n(S
-x+y)
Note: If in place of discount, premium is given, then formula
becomes Rs n(S + x + y).
Now, dividend on Rs 100 = Rs .

2
Dividend on Rs 1100
Also income on investment of Rs 1331

.-. income on investment of Rs 100
Ex:
11
Rs
Find the purchase cost of 80 shares of Rs 10 each at
3
1
discount, brokerage being ~per share.
8
o
Soln: Detail Method:
Since Market Value = Face Value - Discount
.-. Cost of 1 share
= Face value - discount + brokerage
,2x100
=Rs 60.50
Rs 60.50
60.50
= Rs
3. d;
^ 1331
=4.55%.
Hint: See Note, Required answer

= 66[35+ 10+1] = 4 6 x 6 6 = Rs 3036.
Rule 25
To find the annual income if total investment, market value,
face value of the share dividend per cent are given.
Annual Income
3 1
3
= 10-- + -=Rs98 8
4
. Cost of 80 shares = 8 0 x 9 - =Rs780
4
Quicker Method: Applying the above theorem, we
have,
Total Investment* Facevaluex Dividend%

Market Value x 100
Note: Dividend is always calculated on Face value.
purchase cost =
8 0
1 0
Ex:
- ^ + ^ j =Rs780.
Exercise
1.
Find the cost of 96 shares of Rs 10 each at discount,

4
A man invested Rs 2625. When he bought shares of

a company at Rs 105 each, the face value of a share
was Rs 200. The company paid 10 per cent dividend.
Find the dividend earned (income derived) at the end
of the year.
brokerage being per share.
2.
3.
a)Rs912
b)Rs812
c)Rs712
d) None of these
Find the income derived from 44 shares of Rs 25 each at
5 premium (brokerage 1/4 per share), the rate of dividend
being 5%. Also find the rate of interest in the investment.
a) Rs 60.5,4.55%
b) Rs 60,5%
c) Rs 80.5,5.55%
d) None of these
Find the purchase cost of 66 shares of Rs 35 each at 10
premium, brokerage being 1% per share.
a)Rs3630
b)Rs3360
c)Rs3063
d)Rs3036
2625x200x10
Income derived = : =Rs500.
105x100
Exercise
1.
2.
Answers
1. a;
f
3 1
Hint: Required answer = 96 1 0 - - + v
4 4
A
:
Rs912
3.
A man invested Rs 2200. When he bought shares of a

company at Rs 110 each, the face value of a share was
Rs 150. The company paid 5 per cent dividend. Find the
dividend earned (income derived) at the end of the year.
a)Rs200
b)Rs220
c)Rsl50
d)Rs330
a)Rsl200
b)Rsl20
c)Rsl500
d)Rsl50
737
Stocks and Shares

Which is the better investment

a)Rsl26
b)Rsl44
c)Rsl62
d)Rsl48
Answers
l.c
2.a
3.b
Rule 26
To find which one is a better investment from the followings
(i) x % debentures or shares at y^/o premium or discount.
(ii) x % debentures or shares at y % premium or discount.
Step I: Find the Market value,
Market value = 100 + premium or
= 100- discount
Note: If neither premium nor discount is mentioned ie
it is given as 'x% stock at A', then A will be considered as Market Value.
Step II: Arrange them in the way given below
Investment
%
Market value
100 + y, or 100 -y,
x
(i)
(accordingly)
100 + y , o r l 0 0 - y
(ii)
(accordingly)
Step III: Make cross-multiplication and i f
a) (i) > (ii); Investment (i) will be better and i f
b) (ii) > (i); Investment (ii) will be better
4.
5.
(i) 10.5% stock at 130or (ii) 10-%stock at 125?

o
a) 1st investment is more profitable
b) 2nd investment is more profitable
c) Both are equal
d) Can't say
Which as the better investment
(i) 11 % stock at 110 or (ii) 5% stock at 60?
c) Both are equal
d) Can't say
(i)
6.
stock at 90 or (ii) 11% stock at par?
a) 1 st investment is more profitable

c) Both are equal
d) Can't say
(i) 8^-% stock at 80 or (ii) 9% stock at 10 discount?
Ex:
Which is a better investment?

(i) 15% debentures at 8% premium or
(ii) 14% debentures at 4% discount.
Soln: Using the above method, we have
Investment
%
Market Value
(i)
+~s~ ^'
l5
100
7.
(i) 14% stock at 5 below par or

3
(ii) 15% stock at 5 premium?
c) Both are equal
d) Can't say
)=
108
(ii)
1 4 < - ^ ^ ( 1 0 0 - 4 ) = 96
After cross multiplication we obtain,
0)15x96=1440
(ii) 14x108=1520
Here, (ii)>(i)
> <
Answers
l.b;
2. a
Hint:(i)
9
91 =1089
(ii)
2
* 121 = 1092
Here (ii) > (i), hence 2nd investment is more profitable.
3.b
4. a
5. a;
Hint:(i)
.-. Investment (ii) is better.
Exercise
1.
Which is the better investment:

(i) 9 per cent stock at 91 or (ii) 12 per cent stock at 121 ?
c) Both are equal
d) Can't say
2. , Which is the better investment
(i) 12% stock at 100 or (ii) 9% stock at 90?
c) Both are equal
d) Can't say

c) Both are equal
d) Can't say
(ii)
(0>(ii)
6. a;
Hint: (i)
21
90=1050
100 = 990
1
1 st is better investment
33
80 = 742.5
(ii)
9^
^ * 100-10 = 90 = 77
Here, (i) > (ii), hence, (i) is the better investment.
738
7.c;
57
(i)
100-5 = 95 = 1496.25
Amount of stock =
63
(ii)
4
Here, (i) = (ii), .-. Both investments are equal.
4.d;
Hint: 8190 =
To find the Sale Realisation, when amount of stock, market

value and brokerage are given.
Sale Realisation
5. a;
Rule 28
How much money is obtained from the sale of Rs

5000 stock at 123 (Brokerage 1%)?
Soln: Applying the aobve rule, we have,
j
Sale Realisation = 5000 x
Actual rate per cent
=R 6100.
S
Market Value
xlOO
Ex.:
What rate per cent will a man receive who invests his
money in 9 per cent stock at 110?
How much money is obtained from the sale of Rs 30000
Soln: Detail Method: To buy Rs 100 stock, and thus to get
stock at 93 (Brokerage 1%)?

a) Rs 24750 b)Rs 37450 c)Rs 27450 d) None ofthese
How much money is obtained from the sale of Rs 1700
stock at 106 - ?
4
a) Rs 1806.25
b)Rs 1608.25
c) Rs 1808.75
d) None of these
How much stock must be sold to realize Rs 7350 from a
stock at 105? ' \
a)Rs7500
b)Rs6920
c)Rs7000
d)Rs6400
How much stock must be sold to realize Rs 8190 from a
stock at 118 (Brokerage 1%)
a)Rs7100
b)Rs7050
c)Rs6850
d)Rs7000
How much stock must be sold to realise Rs 2130 from a
an annual income of Rs 9 , the man must invest Rs

2
110. This means that Rs 110 cash will bring an income
a)Rs2000
b)Rs2200
ofRs 9 - .
2
Hence the income of Rs 100
= Rs 9 x
=R 8
2 110
11
Quicker Method: Applying the above rule, we can
get directly
S
19
the required answer = - r ^ r ' 00
2x110
x
7
Exercise
c)Rsl800
d)Rs2100
1.
Answers
1
What rate of interest is obtained from investing in 10%
2
at 90?
2
a)lly%
93-- 3
30000x-
= Rs8= 8 %.
11
11
stock at 1 0 6 - ?
2
1. c;
percent rate of stock
Exercise
5.
Rs2000.
213
To find the actual rate per cent, if per cent rate of stock and
market value are given.
Ex.:
4.
2130x200
100
3.
8190x100
rr
= Rs 7000.
117

=Amount of Stock *
2.
x Amount of stock
100
Amount of stock =
Rule 27
1.
7350x100
=Rs7000.
105
1
b)H-%
2
)10-%
d)Noneofthese
== = 183 x 150 = Rs 27450

100
2.
425
2. a;
Hint: Required answer = 1700 x
3.c;
Hint: 7350 = Amount of stock x
4x100
= Rs 1806.25.
105 + 0

per cent at 110?
a) TT%
11
n
100
b)10 %
11
c) 11 %
'
11
d) 12%'
'
11
739
Stocks and Shares
3.
What rate of interest is obtained from investing in 7-
price of Rs 100 stock = Rs 168 cash

3. a;
Hint: Sale Realisation

Market Value
per cent consols at 62 ?

a) 10%
b) 14%
c) 12%
100
d) 16%
120
Answers
l.a
2.a
Too
3.c
x4500 =Rs5400
Miscellaneous
( Total Amount of stock Y

Income before selling =
1.
= 4500x
3
d)Rsl88-
xx3
4.
5.
A man sells Rs 4500, 5% stock at 120 and invests the

proceeds partly in 3% stock at 99 and partly in 8% stock
at 132. He thereby increases his income by Rs 75. How
much of the sale proceeds were invested in each stock?
a)Rs4500
b)Rs4800
c)Rs4200
d)Rs5100
A man's net income from 5% Government paper is Rs
1225 after paying an income tax at the rate of 2%. Find
the number of shares of Rs 1000 each owned by him.
a) 35
b)25
c)45
d)30
A man buys Rs 25 shares in a company which pays 9%
dividend. The money invested by the person is that much
as gives 10% on investment. At what price did he buy
the shares?
a)Rs25
b)Rs 22.50
c)Rs23
4. b;
.-. Cash required for bringing an income of Rs 13

9600
1
xl3 = R s l 2 0
1080
2
.-. the price of Rs 100 stock = Rs 120 cash
Hint: Rs 4 = interest on Rs 100
= Rs
2. a;
1
100 1
-. Rs 2 0 - = interest on Rs
x204
12
4
interest on Rs 168
F 3 2 -
.-. x = Rs 900 invested in 3% stock at 99 and

5400 - x = Rs 4500 invested in 8% stock at 132.
Hint: Face value of 1 share = Rs 1000
Gross income on 1 share = Rs | JQQ '^00
Rs50
Income tax on 1 share's income

2
Rs I
50
Re 1
' 100
Net income on 1 share = Rs (50 - 1) = Rs 49
If the net income is Rs 49, number of share = 1
If the net income is Rs 1225. number of shares
x
d)Rs 23.50
Hint: Cash required for bringing an income of Rs 1080

= Rs9600
7o
(5400 - x ) 8
Answers
1. a;
~ J
= R ?25
100
Income after sale from two stocks = 225 + 75 = Rs 300
Now, we suppose that Rs x of sale proceeds be invested in 3% stock at 99 and Rs (5400 - x) be invested
in 8% stock at 132.
.-. Income from 1 stock + Income from II stock
= Rs 300
A railway stock pays a dividend of 10 per cent. What
3
1
2
a)R 168- b)Rsl68- ) R s l 6 8 j
~100~
rate of stock
price should a person pay for a Rs 100 of the stock so

that he may have 12 per cent interest on his money?
3.
At what price is 13 % stock quoted when Rs 9600

cash can bring an income of Rs 1080 a year?
a)Rsl20
b)Rs220
c)Rs320
d)Rsl50
2.
x Amount of stock
49
5.b;
xl225 = 25
Hint: Face value of 1 share = Rs 25.
1
Dividend on 1 share = Rs (| JQQx W JI
9
Rs ~
Now, Rs 10 is an income on an investment of Rs 100
Rs is an income on an investment ot Rs
4
100
Hence, cost of share = Rs 22.50.

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32

Stocks and Shares

3. Company, Joint Stock Company and Paid-upcapital

5. Face Value and Market Value

Value, Face Value or Par Value. This value is printed on the

value may now be equal to or greater than or less than

6. Different kinds of shares.

7. Relation between Face Value and Market Value

11. Methods for Solving Problems on Stock

9. Stock Exchange, Share Brokers & Brokerage

Market Value + Brokerage

A debenture-holder receives interest on the face value

Market Value + Brokerage

Market Value + Brokerage

Income (Dividend Earned)

Per cent rate of dividend

Face Value x Number of shares

Market Value + Brokerage

[ v Purchase Cost = Total Investment]

per cent rate of stock

Market Value + Brokerage

(b) Actual Rate per cent on Investment

per cent rate of stock

Actual Rate per cent on Investment

Methods For Solving Problems on Shares

To find the cost of purchase when amount of stock and

Amount of stock = Rs 4500 and

(b) Number of shares

Purchase Value of one share

Dividend % x Face Value

What is the cost of Rs 5400, 9 per cent stock at 90?

Find the cost of Rs 12600 Railway stock at 150 - (dividend 5 - % )

a)Rs 18963 b)Rs 19863 c)Rs 18933 d) None of these

10. Find the^ost of Rs 15000, 5 - % , stock at 99 (Brokerage

b) Rs 12500d) None of these

Find the cost of Rs 500, 5% stock at 6 premium.

Hint: Required answer

To find the cost of purchase when amount of stock and the

= Rs 1365 x (104 + 1 ) _ 1365 x105 = Rs 1433.25.

Cost ofpurchase - Amount of stock x

Find the cost of purchase of Rs 1000; 8% stock at 10

the cost of purchase = lOOOx = R 900.

Find the cost of purchase of Rs 500; 3% stock at 5 discount.

Stocks and Shares

Find the cost of purchase of Rs 650; 6% stock at 4 discount.

Find the cost of purchase of Rs 945; 7% stock at 6

To find the cost of purchase when amount of stock and

Find the cost of Rs 2000,5% stock at 5 premium (bro1

Soln: Applying the above formula, we have

Find the cost of purchase of Rs 1000,4% stock at par

Find the cost of Rs 1000, 5% stock at 10 premium (brokerage 1%)

Soln: Applying the above formula, we have

Find the cost of Rs 2500,4% stock at. 4 premium (brokerage ^" )

Find the cost of Rs 2400,7% stock at 7 premium (bro-

Find the cost of purchase of Rs 5000, 4 % stock at par

Find the cost of purchase of Rs 2000, 5% stock at 4

Soln: Applying the above formula, we have

Find the cost of purchase of Rs 1500, 4% stock at 4

How much stock should be sold to realise Rs 1144

the amount of stock =

How much stock should be sold to realise Rs 1050 from

100 + Premium - Brokerage

Find the cash realised by selling Rs 1500,4% stock at