Understand the relationship between nominal value, market value, and dividends, and calculate returns on share investments.
Dividend is always calculated on the nominal (face) value of shares, not the market value at which they're bought or sold.
A person owns 100 shares of nominal value ₹10 each, with a dividend rate of 8%. Find the annual dividend.
Total nominal value=1000; dividend=1000×0.08=₹80
If the market value of each share is ₹15, does this affect the dividend calculation?
No, dividend is calculated only on nominal value, so the dividend remains ₹80 regardless of market price
Return on investment is calculated as (annual dividend / amount invested at market value) × 100, showing the effective yield.
A person invests ₹15,000 buying shares of nominal value ₹100 at a market price of ₹150 each, with 10% dividend rate. Find the number of shares and annual dividend.
Shares=15000/150=100; dividend=100×100×0.10=₹1,000
Find the rate of return on the investment above.
(1000/15000)×100≈6.67%
1. A person owns 200 shares of nominal value ₹10, dividend rate 12%. Find the annual dividend.
2. A person invests ₹20,000 in shares of nominal value ₹100 at market price ₹200, dividend rate 8%. Find the number of shares.
3. Find the annual dividend for the shares above.
4. Find the rate of return on investment for the case above.
5. A person buys shares worth ₹100 nominal at a premium of ₹20 (i.e., market price ₹120). If dividend rate is 15%, find the return on investment.