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LORD JESUS CHRIST SAYS

“Ask and it will be given to you; seek and you will find; knock and the door will be opened to you. For everyone who asks receives; the one who seeks finds; and to the one who knocks, the door will be opened. Matthew 7:7-8

27 Jun 2017

SHARE MARKET-- CAPITAL MARKET GENERAL KNOWLEDGE.

1.  
  Stock Capital:
The total amount of money needed to run the company is called the stock capital.
2.    Shares or Stock:
The whole capital is divided into small units, called shares or stock.
For each investment, the company issues a 'share-certificate', showing the value of each share and the number of shares held by a person.
The person who subscribes in shares or stock is called a share holder or stock holder.
3.    Dividend:
The annual profit distributed among share holders is called dividend.
Dividend is paid annually as per share or as a percentage.
4.    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.
5.    Market Value:
The stock of different companies are sold and bought in the open market through brokers at stock-exchanges. A share or stock is said to be:
i.        At premium or Above par, if its market value is more than its face value.
ii.        At par, if its market value is the same as its face value.
iii.        At discount or Below par, if its market value is less than its face value.
Thus, if a Rs. 100 stock is quoted at premium of 16, then market value of the stock = Rs.(100 + 16) = Rs. 116.
Likewise, if a Rs. 100 stock is quoted at a discount of 7, then market value of the stock = Rs. (100 -7) = 93.

6.    Brokerage:
The broker's charge is called brokerage.
(i)  When stock is purchased, brokerage is added to the cost price.
(ii) When stock is sold, brokerage is subtracted from the selling price.
Remember:
i.        The face value of a share always remains the same.
ii.        The market value of a share changes from time to time.
iii.        Dividend is always paid on the face value of a share.
iv.        Number of shares held by a person
=
Total Investment
=
Total Income
=
Total Face Value
.
Investment in 1 share
Income from 1 share
Face of 1 share
7.    Thus, by a Rs. 100, 9% stock at 120, we mean that:
i.        Face Value of stock = Rs. 100.
ii.        Market Value (M.V) of stock = Rs. 120.
iii.        Annual dividend on 1 share = 9% of face value = 9% of Rs. 100 = Rs. 9.
iv.        An investment of Rs. 120 gives an annual income of Rs. 9.
v.        Rate of interest p.a   =   Annual income from an investment of Rs. 100
=
https://www.indiabix.com/_files/images/aptitude/1-sym-oparen-h1.gif
9
x 100
https://www.indiabix.com/_files/images/aptitude/1-sym-cparen-h1.gif
%
= 7
1
%.
120
2

Exercise :: Stocks and Shares - General Questions
1. 
In order to obtain an income of Rs. 650 from 10% stock at Rs. 96, one must make an investment of:
Rs. 3100
Rs. 6240
Rs. 6500
Rs. 9600
Answer: Option B
Explanation:
To obtain Rs. 10, investment = Rs. 96.
To obtain Rs. 650, investment = Rs.
https://www.indiabix.com/_files/images/aptitude/1-sym-oparen-h1.gif
96
x 650
https://www.indiabix.com/_files/images/aptitude/1-sym-cparen-h1.gif
= Rs. 6240.
10

2. 
A man bought 20 shares of Rs. 50 at 5 discount, the rate of dividend being 13https://www.indiabix.com/_files/images/aptitude/1-div-1by2.gif. The rate of interest obtained is:
12
1
%
2
13
1
%
2
15%
16
2
%
3
Answer: Option C
Explanation:
Investment = Rs. [20 x (50 - 5)] = Rs. 900.
Face value = Rs. (50 x 20) = Rs. 1000.
Dividend = Rs.
https://www.indiabix.com/_files/images/aptitude/1-sym-oparen-h1.gif
27
x
1000
https://www.indiabix.com/_files/images/aptitude/1-sym-cparen-h1.gif
= Rs. 135.
2
100

Interest obtained =
https://www.indiabix.com/_files/images/aptitude/1-sym-oparen-h1.gif
135
x 100
https://www.indiabix.com/_files/images/aptitude/1-sym-cparen-h1.gif%
= 15%
900

3. 
Which is better investment: 11% stock at 143  or  9https://www.indiabix.com/_files/images/aptitude/1-div-3by4.gif% stock at 117?
11% stock at 143
9
3
% stock at 117
4
Both are equally good
Cannot be compared, as the total amount of investment is not given.
Answer: Option B
Explanation:
Let investment in each case be Rs. (143 x 117).
Income in 1st case = Rs.
https://www.indiabix.com/_files/images/aptitude/1-sym-oparen-h1.gif
11
x 143 x 117
https://www.indiabix.com/_files/images/aptitude/1-sym-cparen-h1.gif
= Rs. 1287.
143

Income in 2nd case = Rs.
https://www.indiabix.com/_files/images/aptitude/1-sym-oparen-h1.gif
39
x 143 x 117
https://www.indiabix.com/_files/images/aptitude/1-sym-cparen-h1.gif
= Rs. 1394.25
4 x 117

Clearly, 9
3
% stock at 117 is better.
4

4. 
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:
Rs. 12
Rs. 15
Rs. 18
Rs. 21
Answer: Option B
Explanation:
Dividend on Rs. 20 = Rs.
https://www.indiabix.com/_files/images/aptitude/1-sym-oparen-h1.gif
9
x 20
https://www.indiabix.com/_files/images/aptitude/1-sym-cparen-h1.gif
= Rs.
9
.
100
5
Rs. 12 is an income on Rs. 100.
https://www.indiabix.com/_files/images/aptitude/1-sym-tfr.gif Rs.
9
is an income on Rs.
https://www.indiabix.com/_files/images/aptitude/1-sym-oparen-h1.gif
100
x
9
https://www.indiabix.com/_files/images/aptitude/1-sym-cparen-h1.gif
= Rs. 15.
5
12
5

5. 
By investing in 16https://www.indiabix.com/_files/images/aptitude/1-div-2by3.gif% stock at 64, one earns Rs. 1500. The investment made is:
Rs. 5640
Rs. 5760
Rs. 7500
Rs. 9600
Answer: Option B
Explanation:
To earn Rs.
50
, investment = Rs. 64.
3

To earn Rs. 1500, investment = Rs.
https://www.indiabix.com/_files/images/aptitude/1-sym-oparen-h1.gif
64 x
3
x 1500
https://www.indiabix.com/_files/images/aptitude/1-sym-cparen-h1.gif
= Rs. 5760.


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