A 6% stock yields 8%. What is its market value:___________?
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Answer: B. Rs. 75
Explanation
The correct answer is seventy-five rupees for the market value of the stock. To yield eight percent from a six percent stock, the market value formula is applied. Dividing six by eight and multiplying by one hundred gives seventy-five. Stock market yield is calculated as dividend divided by market value multiplied by one hundred. A six percent stock pays six rupees of dividend per one hundred rupees nominal value. Equating the yield to eight percent allows solving for the unknown market value.
Bond and stock market investors calculate yields to compare investment profitability. Financial analysts evaluate securities by determining their true market value for desired returns. Corporate finance involves pricing stocks to ensure competitive dividend yields for investors. Option A results from an incorrect inverse proportion calculation of the stock yield. Option C underestimates the required yield adjustment for the six percent dividend. Option D represents the inverse ratio calculation instead of the correct market value.
- Subject
- Mathematics
- Category
- Mathematics
- Topic
- —
- Difficulty
- medium
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