What stock amount is required at 90 in a 12% stock to generate an annual income of Rs. 1200:_________?
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Answer: B. Rs. 10000
Explanation
Annual income divided by the dividend rate determines the total nominal stock amount. Dividing 1200 rupees by twelve percent yields a total stock nominal value of 10000 rupees. The question specifically asks for the stock amount required rather than the purchase price. Annual income equals nominal stock amount multiplied by dividend percentage rate. Nominal value represents the face value of the stock issued by the company. Market purchase price applies a discount multiplier to the nominal stock value.
Fixed-income securities require calculating nominal amounts to secure target cash flows. Bond and stock issuance relies on nominal value as the basis for interest payments. Financial planning tools use target income to determine required capital deployment. Choosing 10800 rupees represents an incorrect calculation of the nominal stock base. Choosing 14400 rupees miscalculates the relationship between income and dividend rate. Choosing 16000 rupees overestimates the stock amount required to generate the income.
- Subject
- Mathematics
- Category
- Mathematics
- Topic
- —
- Difficulty
- medium
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