an important question from the book -ML aggarwal( avichal publication)class 10th , chapter3, shares and dividends ……..
we have the information that A man buys 400 ten-rupee shares at a premium of Rs. 2.50 on each share.
If the rate of dividend is 8%, we are to find his investment and dividend received and yield.
the third one “yield” word is confusing . please explain that also.
thank you
Q no. 20, exercise 3, ML Publication, share and dividends
Given number of shares = Rs 400.
Face value of each share = Rs 10.
Market value of each share = Rs 10+2.50 = Rs 12.50
Rate of dividend = 8%
Therefore, face value of 400 shares = 10∗400 = Rs 4,000.
Total investment = no. of share*market value=12.50∗400 = Rs 5,000
Total dividend =face value of all share*rate of dividend/100= 4,000∗(8/100) = Rs 320.
Yield percent = total dividend*100/total investment=(320∗100)/5,000 = 32/5 = 6.4%.
PS: yield percentage is the percentage of total dividend with respect to total investment.