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Stocks And Shares
A man buys Rs. 50 shares in a company which pays a 10% dividend. If the man gets 12.5% return on his investment, at what price did he buy the shares?
Explanation and memory cue
The dividend is 10% on Rs. 50 shares, so the dividend amount is Rs. 5. The man gets a 12.5% return on his investment, so the price he paid (P) satisfies 5/P = 12.5%, or 5/P = 0.125. Solving gives P = 5 / 0.125 = Rs. 40. However, this contradicts the options and the initial correct answer. Rechecking: If the man gets 12.5% return, then Price = Dividend / Yield = 5 / 0.125 = Rs. 40, which matches option A. So the initial correct answer A is correct. The explanation is updated accordingly.