Question

# Mr. Saurabh purchased 80 shares of FV ₹60 at a premium of ₹20. If the company is paying 15% dividend, then the rate of return on investment is .

A
10.75%
B
10.25%
C
12.25%
D
11.25%

Solution

## The correct option is D 11.25%Market Value = FV + Premium = ₹60 + ₹20 = ₹80 Sum invested = Number of shares ×MV = 80 ×80 = ₹6400 Dividend per share = FV ×15100 = 60 ×15100 = ₹9 Total Dividend received for 80 shares = 80 × 9 = ₹720 Rate of return = Dividend incomeSum invested×100           = 7206400×100 = 11.25%Mathematics

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