Question
Aman invests ₹24,000 in 8% stock at ₹120. He sells
the stock when the price rises to ₹150 and reinvests the proceeds in 10% stock at ₹125. What is the change in his annual income?Solution
ATQ, First Investment Face value of stock = ₹100 Market price = ₹120 Investment = ₹24,000 Number of shares = ₹24,000 / ₹120 = 200 shares Annual income = 8% of face value × number of shares = ₹8 × 200 = ₹1,600 Sale and Reinvestment Sale proceeds = 200 shares × ₹150 = ₹30,000 New stock: 10% at ₹125 Number of shares = ₹30,000 / ₹125 = 240 shares Annual income = ₹10 × 240 = ₹2,400 Change in Income New income = ₹2,400 Old income = ₹1,600 Increase in income = ₹800
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