Mrs Gupta invested Rs 16500 on Rs 100 shares at a premium of 10 paying 10% dividend. At the end of the year, she sells the shares at a premium of ₹20. Find her rate of return.
Answer & explanation
Correct answer: option 1
The correct answer is option (1) : $22\frac{8}{11}$%
M.V. of 1 share of $₹100 = ₹(100+10) = ₹110$
Given cost of investment $=₹16500$
∴ No. of shares bought $=\frac{₹16500}{₹110}=₹150$
Dividend on 1 share of ₹100= 15% of $₹100 = ₹15$
Dividend on 150 shares of $₹ 100 = ₹(15×150)= ₹2250$
Given that Mrs. Gupta sold the shares at premium of ₹ 20 i.e. at $₹(100+ 20) = ₹120$
So profit on 1 share $=₹ 120 - ₹110 = ₹10$
Profit on 150 shares $=₹(10×150) = ₹1500$
∴ Total return $=₹2250 + ₹1500=₹3750$
So, rate of return $=\frac{3750}{16500}×100$%
$= 22\frac{8}{11}$%