Dear Reader, Below are three aptitude questions based on stocks and shares.
Question 1
Sunita Devi studied B.Tech (ECE) from a leading college in Tamil Nadu during the years 2004-2008. She got placed in a leading software company based in Bangalore. She was selected in the campus recruitment held in January 2008 and was posted immediately to Hyderabad. Sunita Devi worked in Hyderabad, New Delhi and subsequently was sent for an overseas assignment in USA. She saved considerable amount of money and was keen to invest in stock market. She bought shares investing sizable amount in it. On account of spurt in stock market rates the cost of shares rose by 0.35 p per share and she was compelled to pay Rs.219.80 more than the earlier agreed price. How many shares did Sunita Devi purchase?
a) 658 b) 628 c) 638 d) 858
Answer : b) 628 shares
Solution :
First few lines are not directly or indirectly relevant to the question. Its good to read through those lines fast and to conclude that these are not relevant for answering the question. (read fast, understand and decide quickly).
Now, lets get into the solution :
Increase in price of share - Rs.0.35 per share
Increase in cost of shares - 219.80
No of shares Increase in cost 1 0.35 ? 219.80
Number of shares bought --- 219.80 / 0.35 = 628
(Many candidates may be hesitating to answer questions on stock market – it is advisable to familiarize yourself with the concepts like – SEBI, Stock Exchanges, BSE index, Face value of shares, market value of shares, premium, discount, brokerage etc.)
Question 2
Champakam Investments had an offer for investment at 7½% stock at 105 and 6 ½% stock at 94. As a consultant which investment will you recommend to Champakam Investments?
a) 7 ½% stock at 105
b) 6 ½% stock at 94
c) Both are same
d) None of these.
Answer : a) 7 ½% stock at 105
Solution :
Case I : Consider 7 ½% stock at 105 :
On investing Rs.105, income = 7 ½ = Rs.15/2
On investing Rs.105 x 94 , income = Rs. [ 15/2 x 1/105 x 105 x 94 ] = Rs.705
Case II : Consider 6 ½% stock at 94 :
On investing Rs.94, income = Rs.13/2
On investing Rs. (105 x 94) , income to Rs. [ 13/2 x 1/94 x 105 x 94 ] = Rs.682.50
Hence for same amount of investment i.e Rs.105 x 94 , income on 7 ½% stock at 105 is more.
Question 3
Mr. Rathinasabapathy buys Rs.20 shares paying 9% dividend. He wants to have an interest of 12% on his investment. What should be the market value of each share he is buying?
a) Rs.12 b) Rs.15 c) Rs.21 d) Rs.18
Answer : b) Rs. 15
Solution :
Dividend on 20 Rs. shares = 9/100 x 20 = Rs.9/5
(Note: 1. Readers must understand the fact that the value of a share need not be its market price. For example, in our case, Rs. 20 is the actual value of the share but it may not be equal to the market price which will raise and fall based on demand and market conditions. 2. However, dividend is always calculated on the actual share value and not the market price )
Let M be the market price of the 20 Rs share :
For the dividend to be 12%, it must satisfy the equation (12/100) x M = 9/5
Or, M = 100/12 x 9/5 = Rs. 15