Stocks and Shares – Concepts and Formulas

Stocks and Shares

A large amount of money is needed to start a big business or an industry. This can go beyond one or two individuals’ abilities. As a result, a number of individuals join hands to create a Joint Stock Company.

A number of shares held by a person:

Apti Stocks and Shares

  • Stock purchased/sold = Investment × 100/Market Price
  • Investment/Cash required = Stock × Market Price/100
  • Income/Dividend = Stock × Rate/100
  • Stock purchased/sold = Income × 100/Rate%
  • Investment/Cash required = Income ×Market Price/Rate%
  • Income/Dividend = Investment × Rate/Market Price

Stocks and Shares – Important Formulas & Concepts

Recapitulation of the concepts – I

  • Stock Capital: The total amount of money needed to run a company is called it’s stock capital.
  • Shares or Stock: The whole capital of the company is divided into equal units. Each unit is called a share or a stock.
  • Shareholder or Stockholder: Each individual who purchases one or more shares is called a shareholder (stockholder) of the company. The company issues share certificates to each of its shareholders indicating the number of shares allocated and the value of each share.
  •  Dividend: The annual profit distributed among shareholders is called a dividend. It is paid annually as per share or as a percentage. The dividend is always paid on the face value of a share.
  • Face Value: The value of a share or stock printed on the share-certificate is called its Face Value or Nominal Value or Par Value. The face value of stock always remains the same.

Recapitulation of the concepts – II

  • Market Value: The stocks of different companies can be traded (bought or sold) in the market through brokers at stock exchanges. The market value of a share changes from time to time. The price at which a stock is traded in the market is called its market value.
  • Brokerage: Stocks of different companies can be traded (bought or sold) in the market through brokers at stock exchanges. The brokers’ charge is called brokerage.

General Questions & Answers – Stocks and Shares Aptitude

1. A man purchased 20 shares Rs 50 at 5 discount, the dividend rate is 13. The interest rate obtained is to:

  • A.  12 1/2 %
  • B. 13 1/2%
  • C. 15%
  • D. 16 2/3 %

Answer: Option C (15%)

2. Which one is the better investment: 11% stock at 143  or  9 3/4% stock at 117?

  • A. 11% stock at 143
  • B. 9 3 /4% stock at 117
  • C. Both are equally good
  • D. It cannot be compared to the total amount of investment that is not given.

Answer: Option B (9 3 /4% stock at 117)

3. A man purchases Rs. 20 shares charging a dividend of 9 percent. The man needs his money to have a 12 percent return. Each share has a market value of:

  • A. Rs. 12
  • B. Rs. 15
  • C. Rs. 18
  • D. Rs. 21

Answer: Option B (Rs. 15)

4. A 6% stock yields 8%. The market value of the stock is:

  • A. Rs. 48
  • B. Rs. 75
  • C. Rs. 96
  • D. Rs. 133.33

Answer: Option B (Rs. 75)

5. In order to have an equal amount of income, Rs. 9800 is invested partly in 9% stock at 75 and 10% share at 80. Investment in stock of 9% is:

  • A. Rs. 4800
  • B. Rs. 5000
  • C. Rs. 5400
  • D. Rs. 5600

Answer: Option B (Rs. 5000)

6. Michael earns Rs. 135 by investing in Rs. 1620 in 8% stock. Then, the stock is quoted at:

  • A. Rs. 80
  • B. Rs. 96
  • C. Rs. 106
  • D. Rs. 108

Answer: Option B (Rs. 96)

7. A stock of 12% yielding 10% is quoted at:

  • A. Rs. 83.33
  • B. Rs. 110
  • C. Rs. 112
  • D. Rs. 120

Answer: Option D (Rs. 120)

8. %Find the investment that is made when someone receives Rs. 20,000 by investing in Rs. 50 shares of 15%

  • A. Rs. 5000
  • B. Rs. 6000
  • C. Rs. 7000
  • D. Rs. 8000

Answer: Option A (Rs. 5000)

9. Find the number of stocks that can be purchased at Rs. 8200 at a market value of Rs. 20 with brokerage 2.5%

  • A. 420
  • B. 410
  • C. 400
  • D. 390

Answer: Option C (400)

10. Which of those is a better investment?

  • A. 10% stock at 80
  • B. 15% stock at 70
  • C. 12% stock at 75
  • D. All of the above

Answer: Option D (All of the Above)

11. Find the stock’s market value if 6% yields 10%.

  • A. 60
  • B. 70
  • C. 80
  • D. 100

Answer: Option A (60)

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