A person invests Rs 10000 in 10% 100 shares of a company available at a premium of 25. Find his rate of return.
Answer & explanation
Correct answer: option 1
The correct answer is option (1) : 8%
Cost of investment $= ₹10000$
Market value of one share $=₹(100+25)=₹125$
∴ No. of shares bought $=\frac{₹10000}{₹125}= 80$
Total dividend earned by person $=80 ×10$% of ₹100= ₹800
So, rate of return $=\frac{800}{10000} ×100$%= 8%