Tips on solving Problems Related to Stocks & Shares

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2 TIPS on Cracking Aptitude Questions on Stocks
and Shares
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Recapitulation of the concepts I
Stock Capital The total amount of money needed
to run a company is called its 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 StockholderEach 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 share holders is called
dividend. It is paid annually as per share or as
a percentage. 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 a stock always remains
the same.
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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. A share or stock is said to be
• At premium or Above par, if its market value is
  more than its face value.
• At par, if its market value is the same as its
  face value.
• At discount or Below par, if its market value
  is less than its face value.
• Example Assume that the face value of a company
  X is Rs.10 and it is now traded at a premium of
  Rs.2. Then its market value now is (Rs.10 Rs.2)
  Rs.12.Similarly, if the company X having face
  value of Rs.10 is now traded at a discount of
  Rs.2, it means the market value of X now is
  (Rs.10 Rs.2) is Rs.8
• 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.Brokerage is added to the cost price
  when the stock is purchased and subtracted from
  the selling price when stock is sold.

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Tip 1 Interpret the question correctly

• Rs. 100, 10 stock at 120 means
• The face value of stock Rs. 100
• Dividend 10 of the Face Value Rs. 10
• Market Value Rs. 120.
• Question Find the cash required to buy Rs. 3200,
  7.5 stock at 107.
• Solution
• Face Value Rs. 3200 gt 32 shares must be
  purchased Assume Face Value Rs 100
• Market Price of 32 shares 3200 x 107 Rs. 3424
• Question In order to obtain an income of Rs. 650
  from 10 stock at Rs. 96, what amount must one
  invest?
• Solution
• Face Value Rs. 100
• Dividend 10 of Rs. 100 Rs. 10
• Thus, for gaining Rs. 650, investment 96 x (650
  / 10) Rs. 6240.
• Question Which is better investment 11 stock
  at 143 or 9.75 stock at 117?

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Tip 2 If investment is not mentioned, choose
the investment in the relevant stock as x

• Question Juno invests a part of Rs. 12,000 in
  12 stock at Rs. 120 and the remainder in 15
  stock at Rs. 125. If her total dividend per annum
  is Rs. 1360, how much does she invest in 12
  stock at Rs. 120?
• Solution
• Let the investment in the 1st stock be X. Then,
  investment in 2nd stock 12000 X.
• Income on 1st stock 12 / 120 x X X / 10.
• Income on 2nd stock 15 / 125 x (12000 X)
  3(12000 X) / 25
• X / 10 3 (12000 X) / 25 Rs. 1360.
• 5x 72000 - 6x 1360 x 50.
• x Rs. 4000.
• Question Rs. 9800 are invested partly in 9
  stock at 75 and 10 stock at 80 to have equal
  amount of incomes. Find the investment in 9
  stock.
• Solution
• Let the investment in the 1st stock be X. Then,
  investment in 2nd stock 9800 X.
• Income on 1st stock 9/75 x X 3X/25 on 2nd
  stock 10/80x(9800 X) (9800 X)/8.
• 3X / 25 (9800 X) / 8
• 24x 9800 x 25 - 25x
• 49x 9800 x 25
• x Rs. 5000.

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