Some Important Concepts About Shares & Dividend –
(i) The face value of a share always remains the same.
(ii) The market value of a share changes from time to time.
(iii) Dividend is always paid on the face value of a share.
(iv) Number of shares held by a person.
Total Investment Total Income Total Face Value
= ------------------- = ----------------- = -------------------
Investment in 1 share Income from 1 share Face value of 1 share
Some Important Formulae –
(i) Dividend/Income of a share holder
Rate of Dividend
= Face Value X No. of share X ------------------
100
(ii) Investment/ Sale proceeds = Number of Shares X Maturity Value (M.V)
(iii) Yield Rate/Rate of return on Investment/ Money’s worth
Dividend
= -------------- X 100
Investment
Note – Yield rate is useful in comparing shares of one company with that of the other. Shares having a higher yield rate is a better investment than the shares having a lower yield rate.
There are some statement given below for better understanding –
10% $100 shares at $120 means –
(i) Face value or Nominal Value (N.V) of 1 share = $100
(ii) Market Value (M.V) of 1 share = $120
(iii) Annual dividend on 1 share = 10% of its face value = 10% of $100 = $10
(iv) An investment of $120 gives an annual income of $10
(v) Rate of return per annum = Annual income from an investment of $100
10
= (100 X ------- ) %
120
25 1
= ------- % = 8 ------%
3 3
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