Quantitative Aptitude

Stocks and Shares: Practice Questions with Answers

14 practice questions on Stocks and Shares, with answers; most also have an explanation or a worked solution. Try each one before you open its answer.

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1. Q.1

   A man buys a ₹100 share at ₹120. If the dividend is 8%, find his income on an investment of ₹2,400.

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   Answer: ₹160

   Solution:

   1. Number of shares = 2,400 / 120 = 20.
   2. Dividend per share = 8% of ₹100 = ₹8.
   3. Income = 20 × 8 = ₹160.

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2. Q.2

   A man spends ₹9,600 to buy a 10% stock at 96. Find the face value of stock he purchased and his annual income.

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   Answer: Face value = ₹10,000, Income = ₹1,000

   Solution:

   1. Face value = Cost × 100 / Market price = 9,600 × 100/96 = ₹10,000.
   2. Annual income = 10% of the face value = 10% of 10,000 = ₹1,000.

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3. Q.3

   Find the market value of a ₹100 share paying 10% dividend, if the rate of return (yield) to the investor is 8%.

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   Answer: ₹125

   Solution:

   1. Dividend per share = 10% of ₹100 = ₹10.
   2. Yield% = (Dividend / MV) × 100, so 8 = (10 / MV) × 100.
   3. MV = (10 / 8) × 100 = ₹125.

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4. Q.4

   A man invests ₹1,800 in buying ₹100 shares at a discount of 10%, and receives a dividend of 12%. Find his annual income.

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   Answer: ₹240

   Solution:

   1. Market value = 100 − 10 = ₹90.
   2. Number of shares = 1,800 / 90 = 20.
   3. Dividend per share = 12% of ₹100 = ₹12. Income = 20 × 12 = ₹240.

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5. Q.5

   Which is the better investment: a 9% stock at 120, or an 11% stock at 143?

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   Answer: The 11% stock at 143 (yield ≈ 7.69% vs 7.5%)

   Solution:

   1. Yield of first stock = (9/120) × 100 = 7.5%.
   2. Yield of second stock = (11/143) × 100 ≈ 7.69%.
   3. The second stock gives a slightly higher yield, so it is the better investment, even though its market price is higher.

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6. Q.6

   A ₹100 share paying 10% dividend is bought at a premium of ₹25. Find the rate of return (yield) on the investment.

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   Answer: 8%

   Solution:

   1. Market value = 100 + 25 = ₹125.
   2. Dividend per share = 10% of ₹100 = ₹10.
   3. Yield = (10 / 125) × 100 = 8%.

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7. Q.7

   Find the cost of ₹7,500, 8% stock at 96, and the annual income from it.

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   Answer: Cost = ₹7,200, Income = ₹600

   Solution:

   1. Cost = Face Value × (Market price / 100) = 7,500 × 96/100 = ₹7,200.
   2. Annual income = 8% of the face value = 8% of 7,500 = ₹600.

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8. Q.8

   Which is the better investment: a 6% stock at 80, or a 9% stock at 135?

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   Answer: The 6% stock at 80 (yield 7.5% vs ≈6.67%).

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9. Q.9

   Find the cost of ₹5,000, 10% stock at 110, and the annual income from it.

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   Answer: Cost = ₹5,500, Income = ₹500.

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10. Q.10

    A ₹100 share paying 12% dividend is bought at a premium of ₹20. Find the rate of return.

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    Answer: 10%

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11. Q.11

    A ₹100 share paying 15% dividend is bought at a premium of ₹50. Find the yield.

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    Answer: 10%. MV = 150; (15/150) × 100.

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12. Q.12

    A man buys a ₹100 share at ₹150. If the dividend is 9%, find his income on an investment of ₹3,000.

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    Answer: ₹180

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13. Q.13

    A man spends ₹4,800 to buy a 12% stock at 96. Find the face value of stock purchased and his annual income.

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    Answer: Face value = ₹5,000, Income = ₹600.

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14. Q.14

    A man invests ₹1,600 in buying ₹100 shares at a discount of 20%, and receives a dividend of 15%. Find his annual income.

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    Answer: ₹300

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