Practice MCQ Questions and Answer on Stocks and Shares

1.

A retired man sells out Rs. 7500 of a 10% stock at Rs. 105.50 and invests the proceeds in 14% stock at Rs. 124.50. What is the change in income if he pays a service charge of 0.5% of the face value on each transaction ?

• (A) Rs. 95
• (B) Rs. 114
• (C) Rs. 132
• (D) None of these

Show Answer

 Number of shares sold = $$\frac{7500}{100}$$   = 75 Proceeds from sale of Rs. 7500 stock = Rs. [(105.50 - 0.5) × 75] = Rs. 7875 Number of new shares purchased $$\eqalign{ & = \left( {\frac{{7875}}{{124.50 + 0.50}}} \right) \cr & = \left( {\frac{{7875}}{{125}}} \right) \cr & = 63 \cr} $$ Original income = 10% of Rs. 7500 = Rs. 750 New income = 14% of Rs. 6300 = Rs. $$\left( {\frac{{14}}{{100}} \times 6300} \right)$$   = Rs. 882 ∴ Change in income = Rs. (882 - 750) = Rs. 132

2.

A wants to secure an annual income of Rs. 1500 by investing in 15% debentures of face value Rs. 100 each and available for Rs. 104 each. If the brokerage is 1%, then the sum of money he should invest is -

• (A) Rs. 10504
• (B) Rs. 10784
• (C) Rs. 15000
• (D) Rs. 19642

Show Answer

 Income on each debenture = 15% of Rs. 100 = Rs. 15 Number of debentures required = Rs. $$\left( {\frac{{1500}}{{15}}} \right)$$ = Rs. 100 Cost of each debenture = Rs. (104 + 1% of 104) = (104 + 1.04) = Rs. 105.04 ∴ Total investment = Rs. (105.04 × 100)= Rs. 10504

3.

A 12% stock yielding 10% is quoted at:

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

Show Answer

 $$\eqalign{ & {\text{To}}\,{\text{earn}}\,{\text{Rs}}{\text{.}}\,{\text{10,}}\,{\text{money}}\,{\text{invested}} \cr & = Rs.\,100. \cr & {\text{To}}\,{\text{earn}}\,{\text{Rs}}{\text{.}}\,{\text{12,}}\,{\text{money}}\,{\text{invested}} \cr & = Rs.\,\left( {\frac{{100}}{{10}} \times 12} \right) = Rs.\,120 \cr & \therefore {\text{Market}}\,{\text{value}}\,{\text{of}}\,Rs.\,100\,{\text{stocks}} = Rs.\,120 \cr} $$

4.

By investing in $$16\frac{2}{3}$$% stock at 64, one earns Rs. 1500. The investment made is:

• (A) Rs. 5640
• (B) Rs. 5760
• (C) Rs. 7500
• (D) Rs. 9600

Show Answer

 To earn Rs. $$\frac{{50}}{3},$$ investment = Rs. 64 To earn Rs. 1500, investment = $$\eqalign{ & Rs.\,\left( {64 \times \frac{3}{{50}} \times 1500} \right) \cr & = Rs.\,5760 \cr} $$

5.

Rs. 9800 are invested partly in 9% stock at 75 and 10% stock at 80 to have equal amount of incomes. The investment in 9% stock is:

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

Show Answer

 $$\eqalign{ & {\text{Let}}\,{\text{the}}\,{\text{ivestment}}\,{\text{in}}\,9\% \,{\text{stock}}\,{\text{be}}\,Rs.\,x \cr & {\text{Then,}}\,{\text{investment}}\,{\text{in}}\,10\% \,{\text{stock}} \cr & = Rs.\,\left( {9800 - x} \right) \cr & \frac{9}{{75}} \times \,x\, = \frac{{10}}{{80}}\, \times \,\left( {9800 - x} \right) \cr & \Rightarrow \frac{{3x}}{{25}} = \frac{{9800 - x}}{8} \cr & \Rightarrow 24x = 9800 \times 25 - 25x \cr & \Rightarrow 49x = 9800 \times 25 \cr & \Rightarrow x = 5000 \cr} $$

6.

A man bought 20 shares of Rs. 50 at 5 discount, the rate of dividend being $$13\frac{1}{2}$$. The rate of interest obtained is:

• (A) $$12\frac{1}{2}$$ %
• (B) $$13\frac{1}{2}$$ %
• (C) 15%
• (D) $$16\frac{2}{3}$$ %

Show Answer

 $$\eqalign{ & {\text{Investment}} \cr & = Rs.\,\left[ {20 \times \left( {50 - 5} \right)} \right] \cr & = Rs.\,900. \cr & {\text{FaceValue}} \cr & = Rs.\,\left( {50 \times 20} \right) \cr & = Rs.\,1000. \cr & {\text{Dividend}} \cr & = Rs.\,\left( {\frac{{27}}{2} \times \frac{{1000}}{{100}}} \right) \cr & = Rs.\,135. \cr & {\text{Interest}}\,{\text{Obtained}} \cr & = \left( {\frac{{135}}{{900}} \times 100} \right)\% \cr & = 15\% \cr} $$

7.

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

Show Answer

 For an income of Rs. 8, investment = Rs. 100. For an income of Rs. 6, investment = $$\eqalign{ & Rs.\,\left( {\frac{{100}}{8} \times 6} \right) \cr & = Rs.\,75 \cr} $$ ∴ Market value of Rs. 100 stock = Rs. 75.

8.

A person has deposited Rs. 13200 in a bank which pays 14% interest. He withdraws the money and invests in Rs. 100 stock at Rs. 110 which pays a dividend of 15%. How much does he gain or lose ?

• (A) Loses Rs. 48
• (B) Gains Rs. 48
• (C) Loses Rs. 132
• (D) Gains Rs. 132

Show Answer

 Income from bank = 14% of Rs. 13200 = Rs. 1848 Number of shares purchased = Rs. $$\left( {\frac{{13200}}{{110}}} \right)$$ = Rs. 120 Income from stock = (15% of Rs. 100) × 120 = Rs. (15 × 120) = Rs. 1800 ∴ Loss = Rs. (1848 - 1800)             = Rs. 48

9.

By investing Rs. 1620 in 8% stock, Michael earns Rs. 135. The stock is then quoted at:

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

Show Answer

 To earn Rs. 135, investment = Rs. 1620 To earn Rs. 8, investment = $${\text{Rs}}{\text{.}}\left( {\frac{{1620}}{{135}} \times 8} \right) = {\text{Rs}}{\text{.}}\,96$$ ∴ Market value of Rs. 100 stock = Rs. 96

10.

The cash realised on selling a 14% stock at Rs. 106.25, brokerage being $$\frac{1}{4}$$ %, is-

• (A) Rs. 105.50
• (B) Rs. 106
• (C) Rs. 106.50
• (D) Rs. 113.75

Show Answer

 Cash realised = Rs. (106.25 - 0.25) = Rs. 106