Stocks and Shares Practice Test 1

Question : 28 of 40

Marks: +1, -0

What is the market price of a 3% stock if it yields 4% after paying an income tax of 4 paise in the rupee?

Rs. 36
Rs. 72
Rs. 108
Rs. 144

Solution:

Income tax on Rs. 3 = 3 × 0.04 = Re. 0.12
Net income on Rs. 100 stock = Re. 3 – 0.12 = Rs. 2.88
Now, Rs. 4 = Interest on Rs. 100
Rs. 2.88 = Interest on Rs.

100/4 × 2.88

= Interest on Rs. 72
∴ The market price of the stock is Rs. 72

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