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ICSE Class 10 Mathematics Question 5 of 49

Multiple-Choice Questions — Question 5

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Question 5

Mr. Das invests in ₹ 100, 12% shares of Company A available at ₹ 60 each. Mr. Singh invests in ₹ 50, 16% shares of Company B available at ₹ 40 each. Use this information to state which of the following statements is true.

  1. The rate of return for Mr. Das is 12%

  2. The rate of return for Mr. Singh is 10%

  3. Both Mr. Das and Mr. Singh have the same rate of return of 10%

  4. Both Mr. Das and Mr. Singh have the same rate of return of 20%

Answer

For Mr. Das,

Face value of each share = ₹ 100

Market value of each share = ₹ 60

Dividend per share = 12% of ₹ 100 = ₹ 12.

Rate of return = Dividend per shareM.V. of each share×100=1260×100\dfrac{\text{Dividend per share}}{\text{M.V. of each share}} \times 100 = \dfrac{12}{60} \times 100 = 20%.

For Mr. Singh,

Face value of each share = ₹ 50

Market value of each share = ₹ 40

Dividend per share = 16% of ₹ 50 = ₹ 8.

Rate of return = Dividend per shareM.V. of each share×100=840×100\dfrac{\text{Dividend per share}}{\text{M.V. of each share}} \times 100 = \dfrac{8}{40} \times 100 = 20%.

∴ Both Mr. Das and Mr. Singh have the same rate of return of 20%.

Hence, Option 4 is the correct option.