Assertion (A): Dividend, the profit a shareholder receive from the company, depends on the market value.
Reason (R): Dividend is always calculated as the percentage of face value of the share.
Assertion (A) is true, but Reason (R) is false.
Assertion (A) is false, but Reason (R) is true.
Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct reason for Assertion (A).
Both Assertion (A) and Reason (R) are correct, and Reason (R) is incorrect reason for Assertion (A).
Answer
Dividends are paid based on the face value (nominal value) of the share, not the market value.
The percentage declared as dividend is applied to the face value, regardless of what the share is currently worth on the stock market.
So, assertion (A) is false.
If a company declares a 10% dividend, that means the shareholder gets 10% of the face value per share not the market value.
So, reason (R) is true.
Thus, Assertion (A) is false, but Reason (R) is true.
Hence, option 2 is the correct option.
Quotation of the share of a company is as follows "10% ₹ 120 shares at ₹ 1200".
Assertion (A): The company is in profit.
Reason (R): The above share is at premium.
Assertion (A) is true, but Reason (R) is false.
Assertion (A) is false, but Reason (R) is true.
Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct reason for Assertion (A).
Both Assertion (A) and Reason (R) are correct, and Reason (R) is incorrect reason for Assertion (A).
Answer
"10% ₹ 120 shares at ₹ 1,200"
Here's what this means:
Face value of share = ₹ 120
Dividend rate = 10% of face value = ₹ 12 dividend per share
Market price = ₹ 1,200 (i.e., each share is being sold at ₹ 1,200)
So the share is selling at a premium of ₹ 1,200 − ₹ 120 = ₹ 1,080.
So, reason (R) is true.
The company is in profit if it distributes dividends, which is indicated by the 10% dividend rate in the share quotation.
So, assertion (A) is true.
Thus, both Assertion (A) and Reason (R) are correct, and Reason (R) is incorrect reason for Assertion (A).
Hence, option 4 is the correct option.
A man purchases 1200 shares of a company of face value ₹ 50 at a discount of ₹ 10.
Assertion (A): His total investment is ₹ 60,000.
Reason (R): The market value of each share is ₹ 40.
Assertion (A) is true, but Reason (R) is false.
Assertion (A) is false, but Reason (R) is true.
Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct reason for Assertion (A).
Both Assertion (A) and Reason (R) are correct, and Reason (R) is incorrect reason for Assertion (A).
Answer
Given,
Number of shares = 1200
Face value per share = ₹ 50
Discount = ₹ 10
Market value (purchase price) per share = ₹ 50 − ₹ 10 = ₹ 40
So, reason (R) is true.
By formula,
Investment = Number of shares x Market value per share
= 1200 x 40
= ₹ 48,000.
So, assertion (A) is false.
Thus, Assertion (A) is false, but Reason (R) is true.
Hence, option 2 is the correct option.