Another topic that is very important in Games of Skill is stocks and shares. We have already studied different types of races. So, in this article, we will study the stocks and shares that are also asked in the aptitude section. There are some definitions in Stocks and shares that you need to know before going to the sums.
Concepts in Stocks and Shares
Shares: The total capital in the company is divided into very small units. These units form the worth of a company. Each of this unit is called stock or a share.
Stock capital: To run a company, you require capital. And this total capital in a company is called as the stock capital.
Dividend: When the company makes a profit it distributes it among its shareholders. This distribution of profit is known as the dividend. It is usually paid annually in the form of a percentage of a share.
Also, this dividend is only paid on the face value of any bond.
Shareholder: Perhaps the most important body in the organization are the shareholders. The shareholder of a company is the one who owns more than one share of the company.
As a part of authentication, the company issues a certificate to every shareholder describing the total number of shares given and it’s value.
Face value: The value that is printed on the certificate given to a stockholder or a shareholder it known as face value or a nominal value. Whatever happens, the face value of a share will always remain the same.
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Learn more about the Stock Exchange here in detail
Other Important Definitions
Brokerage: Different companies have different stocks and it can be traded by anyone in the market. This is done through brokers at the share market. The fee that these brokers charge is called the brokerage.
When a stock or a share is purchased, then the cost price is also added with a brokerage.
Also, when the stock is sold, this brokerage is deducted from the selling price.
Market value: Through brokers, you can trade and sell the stocks of the different companies in the market. This value of shares changes depending upon the market.
This change is called the market value of a stock or a share. There are conditions in a share:
- It is called at a below par or discount when the face value of a share is more than the market value
- The market value is at par when the face value is the same as the market value.
- It is above par or at a premium when the face value is less than the market value.
Examples of Stocks and Shares
Q. Aakash wants to invest a part of Rs. 12000 at Rs. 120 in 12% stock. He wants to invest the remaining amount at Rs. 125 in 15% stock. The total dividend he receives per year is Rs. 1360. Find the amount that Aakash should invest in 12% stock at Rs. 120.
Suppose the investment that Aakash should do is Rs. X. So, the second investment by him will be 12000 – X.
Income on 1st share will be, 12/120 x X = X/10
Income for 2nd share, 15/125 x (12000 – X) = 3(12000 – X)/25
=> 3(12000 – X)/25 + X/10 = 1360
So, 72000 + 5X – 6X = 1360 x 50
=> X = 40000
So, the required answer is Rs. 40000.
Practice questions on Stocks and Shares
Q. Find the investment made when someone earns Rs. 20,000 by investing in 15% shares at Rs. 50.
A. Rs. 5000 B. Rs. 6000 C. Rs. 7000 D. Rs. 8000
Answer: A. Rs. 5000
Q. Find the number of stocks that are purchasable at Rs. 8200 with brokerage 2.5% at a market value of Rs. 20.
A. 420 B. 410 C. 400 D. 390
Answer: C. 400