A man invests Rs 8000 in a company paying 8% dividend, when a share of face value of Rs 100 is selling at Rs 60 premium. What is his annual income ?
Answer & explanation
Correct answer: option 2
The correct answer is option (2) : ₹400
A share of 100 is sold a 260 premium
Its mean market value of 1 share = 160
No of shares bought $=\frac{₹8000}{₹160}=50$
Dividend on 1 share of $₹=₹8$
∴ Dividend on 50 large shares of $₹100= (50×8)$
$=₹400$