Shares & Dividends — Multiple Choice Questions

The annual profit distributed among share holders is called :

1. Nominal value

2. Market value

3. Dividend

4. Face value

Answer

Dividend is the money shared from profits among the shareholders.

Hence, Option 3 is the correct option.

The value of a share printed on the share certificate is called :

1. Nominal value

2. Market value

3. Discount

4. Below par

Answer

The value printed on a share certificate is called the nominal value (also known as the face value). Nominal value is the official value printed on the certificate.

Hence, Option 1 is the correct option

The shares of different companies can be bought or sold in the market through stock-exchange. The price at which the share is sold or purchased is called its :

1. Face value

2. Market value

3. Par value

4. Nominal value

Answer

Market value is the price at which a share is currently bought or sold in the stock market.

Hence, Option 2 is the correct option.

A share is said to be at ..............., if its market value is the same as its face value.

1. Premium

2. Discount

3. Par

4. Nominal value

Answer

If a share's market value (current price in the market) is exactly equal to its face value (the value printed on the share certificate), then the share is said to be at par.

Hence, Option 3 is the correct option.

A share is said to be at premium, if market value is ............... than its face value.

1. More

2. Less

3. Same

4. Equal

Answer

If a share’s market value is more than its face value, then the share is said to be at premium.

Hence, Option 1 is the correct option.

The face value of a share :

1. Changes every year

2. Changes from time to time

3. Always remains the same

4. None of these

Answer

The face value of a share is the original value printed on the share certificate when it's issued. It’s like the label price and does not change with market conditions.

Hence, Option 3 is the correct option.

Dividend is always paid on the ............... of a share.

1. Market value

2. Face value

3. Investment

4. Dividend

Answer

A dividend is the portion of a company’s profit that is given to its shareholders. It is always calculated based on the face value, not on how much the shareholder paid or how much the share is currently worth in the market

Hence, Option 2 is the correct option.

The market value of a share :

1. Never changes

2. Changes from time to time

3. Changes every month

4. None of these

Answer

The market value of a share is the price at which it is currently being bought or sold in the stock market. This value depends on factors like company performance, demand, economic trends and so changes from time to time.

Hence, Option 2 is the correct option.

Number of shares held by a person =

1. $\dfrac{\text{Total Nominal Value}}{\text{Face Value of 1 share}}$

2. $\dfrac{\text{Total Market Value}}{\text{Face Value of 1 share}}$

3. $\dfrac{\text{Dividend}}{\text{Face Value of 1 share}}$

4. $\dfrac{\text{Dividend}}{\text{Investment}} \times 100$

Answer

$\text{Number of shares}=\dfrac{\text{Total Nominal Value}}{\text{Face Value of 1 share}}$

Hence, Option 1 is the correct option.

Dividend =

1. Number of shares × N.V

2. Number of shares × M.V

3. $\text{Face Value} \times \text{No. of shares} \times \dfrac{\text{Rate of Dividend}}{100}$

4. None of these

Answer

By formula,

Dividend = $\text{Face Value} \times \text{No. of shares} \times \dfrac{\text{Rate of Dividend}}{100}$

Hence, Option 3 is the correct option.

Rate of return on Investment =

1. $\dfrac{\text{Investment}}{\text{Dividend}}$

2. $\dfrac{\text{Dividend}}{\text{Investment}}$

3. $\dfrac{\text{Dividend}}{\text{Investment}} \times 100$

4. $\dfrac{\text{Investment}}{\text{Dividend}} \times 100$

Answer

By formula,

Rate of return on Investment = $\dfrac{\text{Dividend}}{\text{Investment}} \times 100$

Hence, Option 3 is the correct option.

$\dfrac{ \text{Investment}}{ \text{Sale proceeds}} =$

1. Number of shares × M.V

2. Number of shares × N.V

3. Face Value × No. of shares × Rate of Dividend

4. $\dfrac{ \text{Dividend}}{ \text{Investment}}$

Answer

$\dfrac{ \text{Investment}}{ \text{Sale proceeds}} =$ Number of shares × M.V

Hence, Option 1 is the correct option.

Annual Income =

1. Number of shares × Face Value

2. Number of shares × rate of dividend × Face value of 1 share

3. Number of shares × Market value × Face value

4. MV × NV × 100

Answer

By formula,

Annual Income = Number of shares × rate of dividend × Face value of 1 share

Hence, Option 2 is the correct option.

A man invested in a company paying 12% dividend on its share. If the percentage return on his investment is 10%, then the shares are:

1. at par

2. below par

3. above par

4. cannot be determined

Answer

Given,

Dividend rate = 12% of face value.

So, if face value = ₹100, dividend = ₹12.

Return = 10%

By formula,

Return % = $\dfrac{\text{Dividend on one share}}{\text{Investment on one share}} \times 100$

Investment on one share equals to the market value of the share.

Substituting values we get :

$\Rightarrow 10 = \dfrac{\text{12}}{\text{Market value}} \times 100 \\[1em] \Rightarrow \text{Market value} = \dfrac{12}{10} \times 100 \\[1em] \Rightarrow \text{Market value} = ₹120.$

Since market value > face value, the shares are said to be above par.

Hence, option 3 is the correct option.

If a share of ₹ 125 is selling at ₹ 96, then it is said to be selling at ₹ 29 :

1. Below par

2. At par

3. Above par

4. Premium

Answer

Given,

Face Value = ₹ 125

Market Value = ₹ 96

Discount = Face Value - Market Value = 125 - 96 = ₹ 29

This means the share is being sold at a discount of ₹ 29, which is also known as being sold below par.

Hence, Option 1 is the correct option.

If Kabir invests ₹ 10,320 on ₹ 100 shares at a discount of ₹ 14, then the number of shares he buys is :

1. 110

2. 120

3. 150

4. 100

Answer

Given,

Investment = ₹ 10,320

Face Value = ₹ 100

Discount = ₹ 14

Market Value = Face Value - Discount = 100 - 14 = ₹ 86

By formula,

$\text{Number of shares} = \dfrac{ \text{ Investment }}{ \text{ Market value}}\\[1em] = \dfrac{10320}{86}\\[1em] = 120.$

Hence, Option 2 is the correct option.

Shahrukh has some shares of ₹ 50 of a company paying 15% dividend. If his annual income is ₹ 3,000, then the number of shares he possesses is :

1. 400

2. 600

3. 800

4. 200

Answer

Given,

Face Value = ₹ 50

Dividend Rate = 15%

Annual Income = ₹ 3,000

Let the number of shares be x.

By formula,

⇒ Annual dividend = No. of shares × Rate of div. × N.V. of 1 share

⇒ 3000 = x × $\dfrac{15}{100}$ × 50

⇒ x = $\dfrac{3000 \times 100}{15 \times 50}$

⇒ x = 200 × 2

⇒ x = 400

Hence, Option 1 is the correct option.

If Kiran invests ₹ 19200 on ₹ 50 shares at a premium of 20%, then the number of shares she buys is :

1. 640

2. 160

3. 320

4. 240

Answer

Given,

Investment = ₹ 19,200

Face Value = ₹ 50

Premium Rate = 20%

Premium = 20% of 50 = $\dfrac{20}{100}$ ×50 = ₹ 10

Market Value = Face Value + Premium = 50 + 10 = ₹ 60

By formula,

Number of shares = $\dfrac{\text{Investment}}{\text{Market Value of each share}} = \dfrac{19200}{60}$ = 320.

Hence, Option 3 is the correct option.

The sum invested to purchase 15 shares of a company of nominal value ₹ 75 available at a discount of 20% is:

1. ₹ 60

2. ₹ 90

3. ₹ 1350

4. ₹ 900

Answer

N.V. = ₹ 75

Discount = 20%

M.V. = ₹ 75 - $\dfrac{20}{100} \times 75$

= ₹ 75 - ₹ 15

= ₹ 60.

Cost of 15 shares = 15 × ₹ 60 = ₹ 900.

Hence, Option 4 is the correct option.

Varun possesses 600 shares of ₹ 25 of a company. If the company announces a dividend of 8%, then his annual income is:

1. ₹ 600

2. ₹ 1,200

3. ₹ 480

4. ₹ 120

Answer

Given,

Number of shares = 600

Face Value = ₹ 25

Dividend rate = 8%

By formula,

Annual income = No. of shares × Rate of div. × N.V. of 1 share

= 600 × $\dfrac{8}{100}$ × 25 = ₹ 1,200.

Hence, Option 2 is the correct option.

A man invests ₹ 24,000 on ₹ 60 shares at a discount of 20%. If the dividend declared by the company is 10%, then his annual income is :

1. ₹ 2,880

2. ₹ 1,500

3. ₹ 3,000

4. None of these

Answer

Given,

Investment = ₹ 24,000

Face Value = ₹ 60

Dividend rate = 10%

Discount = 20% of 60 = $\dfrac{20}{100} \times 60$ = ₹ 12

Market Value = Face Value - Discount = 60 - 12 = ₹ 48.

By formula,

$\text{Number of shares} = \dfrac{\text{ Investment }}{\text{ Market value of each share}}\\[1em] = \dfrac{24000}{48} \\[1em] = 500. \\[1em] \text{Annual dividend} = \text{No. of shares} \times \text{Rate of div.} \times \text{ N.V. of 1 share}\\[1em] = 500 \times \dfrac{10}{100} \times 60 \\[1em] = ₹\ 3,000.$

Hence, Option 3 is the correct option.

Amit invested a certain sum of money in ₹ 100 shares, paying a 7.5% dividend. The rate of return on his investment is 10%. The money invested by Amit to purchase 10 shares is :

1. ₹ 250

2. ₹ 750

3. ₹ 900

4. ₹ 1100

Answer

Let ₹ P be the price per share.

Amit brought 10 shares, so total investment = ₹ 10P

Dividend = 7.5%

Dividend per share = $\dfrac{7.5}{100} \times 100$ = ₹ 7.5

Total dividend = ₹ 7.5 × 10 = ₹ 75.

Rate of return = 10%

By formula,

Rate of return × Investment = Dividend

$\Rightarrow 10$

Total investment = 10P = 10 × ₹75 = ₹750.

Hence, Option 2 is the correct option.

₹ 25 shares of a company are selling at ₹ 20. If the company is paying a dividend of 12%, then the rate of return is :

1. 10%

2. 18%

3. 15%

4. 12%

Answer

Given,

Face Value = ₹ 25

Market Value = ₹ 20

Dividend rate = 12%

Let the rate of return be x%,

By formula,

Rate of dividend × N.V. = Profit (return) % × M.V.

$\therefore \dfrac{12}{100} \times 25 = \dfrac{\text{x}}{100} \times 20\\[1em] \Rightarrow 12 \times 25 = 20x \\[1em] \Rightarrow \text{x} = \dfrac{300}{20}\\[1em] \Rightarrow \text{x} = 15$

∴ Rate of return = 15%.

Hence, Option 3 is the correct option.

₹ 40 shares of a company are selling at 25% premium. If Mr. Wasim wants to buy 280 shares of the company, then the investment required by him is :

1. ₹ 14,000

2. ₹ 16,800

3. ₹ 8,400

4. ₹ 10,000

Answer

Given,

Face Value = ₹ 40

Premium rate = 25%

Premium = 25% of 40 = $\dfrac{25}{100} \times 40$ = ₹ 10

Number of shares = 280

Market Value = Face Value + Premium = 40 + 10 = ₹ 50

By formula,

Investment = Number of shares × Market Value of each share

= 280 × 50 = ₹ 14,000.

Hence, Option 1 is the correct option.

Percentage return on ₹100, 12% share of a company bought at 4% discount is:

1. 10%

2. 12%

3. 12.5%

4. 16%

Answer

Given,

Face value = ₹ 100

Discount = 4%

Discount amount = 4% of face value

= $\dfrac{4}{100} \times 100$

= ₹ 4.

Dividend rate = 12%

Dividend = 12% of face value

= $\dfrac{12}{100} \times 100$

= ₹ 12.

Market price = Face value - Discount

= ₹ 100 - ₹ 4

= ₹ 96.

By formula,

Return = $\dfrac{\text{Dividend earned on one share}}{\text{Market Price of one share}} \times 100$

= $\dfrac{12}{96} \times 100$

= 12.5%

Hence, option 3 is the correct option.

Akshay buys 350 shares of ₹ 50 par value of a company. The dividend declared by the company is 14%. If his return percent from the shares is 10%, find the market value of each share.

1. ₹ 55

2. ₹ 60

3. ₹ 65

4. ₹ 70

Answer

Given,

Rate of dividend = 14%

Dividend on ₹ 50 = $\dfrac{14}{100} \times 50$ = ₹ 7.

Given,

Return percent from the shares is 10%.

∴ Interest on ₹ 100 = $\dfrac{10}{100} \times 100$ = ₹ 10.

∴ ₹ 7 will be interest on $\dfrac{100}{10} \times 7$ = ₹ 70.

Hence, Option 4 is the correct option.

Mr. Das invests in ₹ 100, 12% shares of Company A available at ₹ 60 each. Mr. Singh invests in ₹ 50, 16% shares of Company B available at ₹ 40 each. Which of the following statements is true?

1. The rate of return for Mr. Das is 12%.

2. The rate of return for Mr. Singh is 10%.

3. Both Mr. Das and Mr. Singh have the same rate of return of 10%.

4. Both Mr. Das and Mr. Singh have the same rate of return of 20%.

Answer

For Mr. Das,

Face value of each share = ₹ 100

Market value of each share = ₹ 60

Dividend per share = 12% of ₹ 100 = ₹ 12.

Rate of return = $\dfrac{\text{Dividend per share}}{\text{M.V. of each share}} \times 100 = \dfrac{12}{60} \times 100$ = 20%.

For Mr. Singh,

Face value of each share = ₹ 50

Market value of each share = ₹ 40

Dividend per share = 16% of ₹ 50 = ₹ 8.

Rate of return = $\dfrac{\text{Dividend per share}}{\text{M.V. of each share}} \times 100 = \dfrac{8}{40} \times 100$ = 20%.

∴ Both Mr. Das and Mr. Singh have the same rate of return of 20%.

Hence, Option 4 is the correct option.