Practice MCQ Questions and Answer on Stocks and Shares

11.

The market value of a 10.5% stock, in which an income of Rs. 756 is derived by investing Rs. 9000, brokerage being $$\frac{1}{4}$$%, is:

• (A) Rs. 108.25
• (B) Rs. 112.20
• (C) Rs. 124.75
• (D) Rs. 125.25

Show Answer

 $$\eqalign{ & {\text{For}}\,{\text{an}}\,{\text{income}}\,{\text{of}}\,Rs.\,756,\,{\text{investment}} \cr & = Rs.\,9000 \cr & {\text{For}}\,{\text{an}}\,{\text{income}}\,{\text{of}}\,Rs.\,\frac{{21}}{2},\,{\text{investment}} \cr & = Rs.\,\left( {\frac{{9000}}{{756}} \times \frac{{21}}{2}} \right) = Rs.\,125 \cr & \therefore {\text{For}}\,{\text{a}}\,Rs.\,100\,{\text{stock,}}\,{\text{investment}}\, = Rs.\,125 \cr & {\text{Market}}\,{\text{value}}\,{\text{of}}\,Rs.\,100\,{\text{stock}} \cr & = Rs.\,\left( {125 - \frac{1}{4}} \right) = Rs.\,124.75 \cr} $$

12.

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

13.

Which is better investment, 12% stock at par with an income tax at the rate of 5 paise per rupee or $$14\frac{2}{7}\% $$  stock at 120 free from income tax ?

• (A) 12% stock
• (B) $$14\frac{2}{7}\ $$% stock
• (C) Both are equally good
• (D) Cannot be compound

Show Answer

 Let investment in each case = Rs. (100 × 120) Income from 12% stock = $$ {\frac{{12}}{{100}} \times 100 \times 120} $$    = Rs. 1440 Net income = Rs. $$\left( {1440 - \frac{5}{{100}} \times 1440} \right)$$     = Rs. 1368 Income from $$14\frac{2}{7}\ $$% stock = Rs. $$\left( {\frac{{100}}{{7 \times 20}} \times 100 \times 120} \right)$$     = Rs. 1428.57 Clearly, $$14\frac{2}{7}\ $$% stock is better.

14.

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.

15.

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

16.

A man buys Rs. 20 shares paying 9% dividend. The man wants to have an interest of 12% on his money. The market value of each share is:

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

Show Answer

 $$\eqalign{ & {\text{Dividend}}\,{\text{on}}\,Rs.\,20 \cr & = Rs.\,\left( {\frac{9}{{100}} \times 20} \right) \cr & = Rs.\,\frac{9}{5} \cr & Rs.\,12\,{\text{is}}\,{\text{an}}\,{\text{income}}\,{\text{on}}\,Rs.\,100. \cr & \therefore Rs.\,\frac{9}{5}\,{\text{is}}\,{\text{an}}\,{\text{income}}\,{\text{on}} \cr & = Rs.\,\left( {\frac{{100}}{{12}} \times \frac{9}{5}} \right) \cr & = Rs.\,15 \cr} $$

17.

A 12% stock yielding 10% is quoted at:

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

Show Answer

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

18.

A man invests in a 16% stock at 128. The interest obtained by him is ?

• (A) 8%
• (B) 12%
• (C) 12.5%
• (D) 16%

Show Answer

 By investing Rs. 128, income derived = Rs. 16 By investing Rs. 100, income derived = Rs. $$\left( {\frac{{16}}{{128}} \times 100} \right)$$   = Rs. 12.5 ∴ Interest obtained = 12.5%

19.

The income derived from a Rs. 100, 13% stock at Rs. 105, is -

• (A) Rs. 5
• (B) Rs. 8
• (C) Rs. 13
• (D) Rs. 18

Show Answer

 Income on Rs. 100 stock = Rs. 13

20.

Which is better investment: 11% stock at 143  or  $$9\frac{3}{4}$$% stock at 117?

• (A) 11% stock at 143
• (B) $$9\frac{3}{4}$$% stock at 117
• (C) Both are equally good
• (D) Cannot be compared, as the total amount of investment is not given.

Show Answer

 $$\eqalign{ & {\text{Let}}\,{\text{investment}}\,{\text{in}}\,{\text{each}}\,{\text{case}}\,{\text{be}} \cr & Rs.\,\left( {143 \times 117} \right) \cr & {\text{Income}}\,{\text{in}}\,{{\text{1}}^{{\text{st}}}}\,{\text{case}} \cr & = Rs.\left( {\frac{{11}}{{143}} \times 143 \times 117} \right) \cr & = Rs.\,1287 \cr & {\text{Income}}\,{\text{in}}\,{{\text{2}}^{{\text{nd}}}}\,{\text{case}} \cr & = Rs.\,\left( {\frac{{39}}{{4 \times 117}} \times 143 \times 117} \right) \cr & = Rs.\,1394.25 \cr & {\text{Clearly,}}\,9\frac{3}{4}\% \,{\text{stock}}\,{\text{at}}\,117\,{\text{is}}\,{\text{better}} \cr} $$