All Categories MCQs
Topic Notes: All Categories
General Description
Plato
- Biography: Ancient Greek philosopher (427–347 BCE), student of Socrates and teacher of Aristotle, founder of the Academy in Athens.
- Important Ideas:
- Theory of Forms
- Philosopher-King
- Ideal State
1661
When a stock is available 'at a discount', what is the relationship between its values?
Answer:
Market Value < Face Value
A stock trades 'at a discount' or 'below par' when its current market price (Market Value) is lower than the Face Value printed on the certificate.
1662
If a stock is quoting 'at a premium', which of the following is true?
Answer:
Market Value > Face Value
A stock is said to be 'at a premium' or 'above par' when its trading price (Market Value) in the stock market is greater than its original Nominal or Face Value.
1663
What is the financial meaning when a stock is said to be selling 'at par'?
Answer:
Its Market Value equals its Face Value
The term 'at par' means the stock is trading exactly at its nominal or face value. There is neither a premium nor a discount.
1664
When a problem mentions 'a 10% stock', what does the '10%' indicate?
Answer:
The dividend paid as a percentage of the Face Value
In standard financial terminology for these problems, 'a 10% stock' refers directly to the annual dividend rate provided by the company, calculated as 10% of the Face Value.
1665
What does the term 'Face Value' or 'Nominal Value' of a share refer to?
Answer:
The value printed on the share certificate by the company
The Face Value or Nominal Value is the original value of the stock as decided by the company and is printed on the share certificate. Dividends are calculated as a percentage of this value.
1666
A man sells 150 shares of a 6% stock of Rs. 100 at Rs. 80. He invests the money in an 8% stock at Rs. 96. What is the change in income?
Answer:
Increase of Rs. 100
Original income = 150 × 6 = Rs. 900. Sale proceeds = 150 × 80 = Rs. 12,000. New shares = 12000 / 96 = 125. New income = 125 × 8 = Rs. 1,000. Change = 1000 - 900 = Increase of Rs. 100.
1667
An investor sells 100 shares of 15% stock of Rs. 100 at Rs. 110 and reinvests in a 10% stock at Rs. 100. Find the change in his income.
Answer:
Decrease of Rs. 400
Original income = 100 × 15 = Rs. 1,500. Sale proceeds = 100 × 110 = Rs. 11,000. New shares = 11000 / 100 = 110 shares. New income = 110 × 10 = Rs. 1,100. Change = 1100 - 1500 = Decrease of Rs. 400.
1668
A man sells 60 shares of a 12% stock of Rs. 100 at Rs. 150. He invests the proceeds in a 9% stock at Rs. 90. What is the change in his income?
Answer:
Increase of Rs. 180
Original income = 60 × 12 = Rs. 720. Sale proceeds = 60 × 150 = Rs. 9,000. New shares = 9000 / 90 = 100 shares. New income = 100 × 9 = Rs. 900. Change = 900 - 720 = Increase of Rs. 180.
1669
A person has 200 shares of Rs. 100, paying 8%. He sells them at Rs. 90 and reinvests in a 10% stock at Rs. 120. Find the change in his income.
Answer:
Decrease of Rs. 100
Original income = 200 × 8 = Rs. 1,600. Sale proceeds = 200 × 90 = Rs. 18,000. New shares = 18000 / 120 = 150. New income = 150 × 10 = Rs. 1,500. Change = 1500 - 1600 = Decrease of Rs. 100.
1670
A man holds 100 shares of Rs. 100 each in a 10% stock. He sells them at Rs. 120 and invests the proceeds in an 8% stock at Rs. 80. What is the change in his income?
Answer:
Increase of Rs. 200
Original income = 100 × 10 = Rs. 1,000. Sale proceeds = 100 × 120 = Rs. 12,000. Number of new shares = 12000 / 80 = 150 shares. New income = 150 × 8 = Rs. 1,200. Change = 1200 - 1000 = Increase of Rs. 200.