Shares and Mutual fund

1. Shares:

Share : The smallest unit of a company

Types shares : There are two types of shares

1. Equity Shares or Ordinary Shares:

Shares for whom the dividend and return of capital is paid after
paying the preference share holders.
2. Preference Shares :
Shares for whom the dividend and the return of capital is paid
before paying the equity shareholders.

Bonus shares : Shares that are issued by a company ton its existing
share holders in a fixed ratio to the number of existing shares held by
them.

Discount: At a market price that is lower than the face value of a

share.

Premium : At a market price that is higher than the face value of a

share.

Face value : The value of a share that is printed on the shares

certificate or in its initial public offer.

Market value : Price at which a share is sold on the stock exchange.

Dividend : payment made to shareholders by a company. Dividend is

declared on the face value of a share. Dividend per share expressed as
a percentage of the face value of a share is called as the rate of
dividend .
Rate of return on investment : The total income from an investment
expressed as a percentage of the total investment.

Basic formula :

1. Number of shares = Face value of all shares

Face value of one share
2. Rate of dividend = total dividend X 100
Face Value of All shares
3. Total dividend= rate of dividend X face value X number of shares.

100

4. Rate of return on investment = income X 100

. investment

5. Total Investment = purchase cost X No. of Shares

6. Amount Received = Amount Received - Brokerage
Amount Received = Amount Received X No. of Shares
7. Gain = Amount Received – Purchase Price
Problems:

Find the total dividend at 10 % on 340 shares of face value Rs. 100
each.

Given :

Rate of dividend = 10 %

Number of share = 340

Face value = 100

Total dividend = ?

Ans:

Total dividend = rate of dividend X face value X number of shares

100

= 10 X 100 X 340

100

= 3400.
Find the number of shares if the total dividend at 8 % on shares with
face value Rs. 10 was RS. 240.

Given :

Rate of dividend = 8 %

Face value = 10

Total dividend = 240

Number of share = ?

Total dividend = rate of dividend X face value X number of shares

100

240 = 8 X 10 X No.of Shares

100

240 = 0.08 X 10 X No.of Shares

240 = 0.8 x No.of Shares

No.of shares = 240 = 300.

0.8
Find the face value of a shares if an investment of Rs. 900000 put into
purchase 8 % shares quoted at Rs. 15 each, earned a total dividend of
Rs. 9600.

Given:

Investment = 900000

Rate of dividend = 8 %

Purchase price = 15

Total dividend = 9600

Face value = ?

No. of Shares = Investment

Purchase price of 1 share

= 900000

15

No.of shares = 60,000.

Total dividend = rate of dividend X face value X number of shares

100

9600 = 8 X face value X 60000

100
9600 = 4800 X face value

Face value = 9600

4800

Face value = 2

Find the number of shares purchased by Ms . kangana Kapoor who

invested Rs.2,79,837 in Rs. 5 shares quoted at Rs. 62 paying 0.3 %
brokerage.

Given

Brokeage = 0.3 %

Investment = 2,79,837

Market price = 62

Ans:

The brokerage @ 0.3 % of Rs. 62 = 62 x 0.3

100

= 0.186

The purchase price of 1 share = market price + brokerage

= 62 + 0.186

= 62.186.
Number of shares = investment

Purchase price of 1 share

= 2,79,837

62.186

= 4500.

Find the total dividend and rate of return on investment if Rs. 36,800
were invested in Rs. 10 shares quoted at Rs. 80 and a 30 % dividend
was earned.

Given

Investment= 36800

Face value = 10

Purchase price = 80

Rate of dividend = 30 %

Number of Share = investment

Purchase price of 1 share

= 36800

80

= 460.
Total dividend = rate of dividend X face value X number of shares

100

= 30 X 10 X 460

100

= 1380.

Rate return on investment = income X 100

Investment

= 1380 X 100

36800

= 3.75

Or

Rate return on investment = total dividend X 100

Total Investment
Mr. Kiran purchased 40 Rs 10 shares at Rs . 150 each and sold them
two month later at Rs. 180 each . find his total cost , total sale amount
received and total gain, if there was no brokerage involved.

Also find

1. Total dividend
2. Rate of return on investment

Given

There was No brokerage

No.of shares= 40

f.V=10

M.p = 150

S.P= 180

Ans:

The purchase price of 1 share = M.P=150

Total purchase price / total cost = purchase price of 1 share X no. of

shares

= 150 X 40

= 6000.

The selling price of 1 share = 180

Total Amopunt received = S. P X No. of shares

 = 180 X 40

= 7200

Gain = amount received – amount invested

Gain = 7200 – 6000

Gain = 1200

Also find

1. Total dividend
Total dividend = rate of dividend X face value X number of shares

100

= 8 X 10 X 40

100

= 32.

Rate of return investment = total income X 100

Total investment

Total income= income + dividend

= 1200 + 32 = 1232

Rate of return on investment = 1232 X 100

6000

= 21.03
Mr. Daler singh bought 200 Rs. 5 Shares at Rs. 40 each. After getting 40
% dividend , he sold them at Rs. 41 each . find his rate of return on
investment.

Given
No. of shares= 200
f.v= 5
P.P = 40
Rate dividend = 40 %
S.P= 41

There was no brokerage

Investment= P.P X No.of shares
= 40 X 200
= 8000
Total dividend = rate of dividend X F.V X no. Of shares
100
= 40 X 5 X 200
100
= 400
Amount received = S.P X No.of shares
= 41 X 200
= 8200.

Gain= Amount received – Amount invested

= 8200 – 8000
= 200
Total gain = gain + dividend
= 200 + 400
= 600
Rate of rerun on investment = total gain X 100
Total investment
= 600 X 100
8000
= 7.5

1. the value of total investment is Rs. 4500 and the total income is Rs.
950. Find the rate of return on investment.

Investment= 4500

Income = 950

Rate of return on investment= income x 100

Investment

= 950 X 100

4500

= 21

2. if the purchase price of share is Rs. 45 , number of share is 65 and

the Selling price of the share is Rs. 47 find the total income.
Given
No.of shares = 65
Purchase price= 45
Total amount invested = purchase price X no.of shares
= 45 x 65
=2925
The selling price of 1 share= 47
 Total amount received = Selling price X No.of shares
= 47 x 65
= 3055
Total income = Amount Received – Amount invested

= 3055- 2925= 130.

3. find the total dividend if the rate of dividend is 5 % , face value is

Rs. 10 and number of share is 150.

Given

Rate of dividend = 5 %

Face value = 10

Number of shares = 150

Total dividend = rate of dividend X face value x No.of shares

100

= 5 X 10 X 150

100

= .05 x10 X 150

=75
 Mutual fund

Shares= UNIT

Brokerage /commission= load- Entry load/ Exit load

Purchase = NAV( Net Asset Value )+ Entry load

Redemption- selling = NAV-Exit load

NAV = total assets – total liabilities

Total gain= income + dividend

Income= redemption price- purchase price

Rate of return on income = income X 100

Investment
Example

Mr. Ashok purchased 445.7652 units of “HSBC Cash IP-Growth” on

28/01/08 when the NAV was Rs.13.46. its NAV on 05/05/08 was Rs.
13.75. find the amount invested on 28/01/08 and the value of the unit
on 05/05/08. There was no entry or Exit load involved.

Given

Number of unit = 445.7652

NAV on 28/01/08= 13.46
NAV on 05/05/08 = 13.75

There was no Entry or Exit Load

Purchase price = NAV on 28/01/08= 13.46

Total investment = NAV on 28/01/08 X Number of Unit

= 13.46 X 445.7652
= 6000

Redemption price = NAV on 05/05/08= 13.75

Total redemption price= NAV on 05/05/08 X Nu,mber of Unit
= 13.75 X 445.7652
=6130

Total income/gain= redemption amount- investment

= 6130-6000
= 130
Rate of return = income / gain X 100
Investment
= 130 X 100
6000
= 2.16

Mr. pinakin invested Rs 15000 on 07/02/07 in “ UTI Fund –Dividend

Plan” at an NAV of Rs. 21.87 . he sold all unit on 05/05/08 at an NAV of
Rs. 22.99 . Find his total gain. Also find His rate of return on
investment. There was no entry or Exit load.

Mr. pinakin invested Rs 15000 on 07/02/07 in “ UTI Fund –Dividend

Plan” at an NAV of Rs. 21.87 and an entry load of 2.25 % . he sold all
unit on 05/05/08 at an NAV of Rs. 22.99 with no Exit Load. Find his
total gain. Also find His rate of return on investment .

GIVEN:

Investment amount= 15000

NAV = 21.87

Entry load @ 2.25 of NAV= 21.87 X 2.25

100

= 0.492075

Purchase price of 1 unit = NAV + Entry load

= 21.87 + 0.492075
 = 22.362075

.. the investment = 15000

Number of unit = total investment

Purchase price of 1 unit

= 15000

22.362075

Number of unit= 670.7785

Redemption price of unit = NAV on 05/05/08=22.99

There was no Exit load

Redemption price = 22.99

Total redemption amount = redemption price X number of unit

= 22.99 X 670.7785

= 15421.1977

Total gain = redemption amount – investment

= 15421.1977 – 15000

Total gain = 421.1977

Rate of return on investment= total gain X 100

Investment

= 421.1977 X 100
 15000

= 2.8079

On 09/09/07 ms. Beena invested Rs. 7000 at an NAV of Rs. 35.5251 and
an entry load of 2.25 % in “ FI Prima Plus” and after getting a dividend
@ Rs.6 per unit on 15/02/08, she redeemed all her unit at an NAV of
Rs.32.0700 and no exit load on 23/04/08. Find the total gain. Find the
rate reutn on investment.

Given

Entry load @ 2.25 %

Entry load @2.25 % of NAV 35.5251 = 35.5251 X 2.25

100

= 0.7993

Purchase price = NAV+ Enrty load

= 35.5251 + 0.7993

= 36.3244.

Total investment= 7000

Number of unit= investment

Purchase price
 = 7000

36.3244

= 192.7079

Dividend @ Rs. 6 per unit

Total dividend = dividend X number of unit

= 6 X 192.7079

= 1156.2474.

There was no exit load

Redemption price = NAV on23/04/08

= 32.0700

Total redemption amount= redemption price X number unit

= 32.0700 X 192.7079

= 6180.1423

Gain = redemption Amount- Investment

= 6180.1423- 7000

= -819.8577

Total gain = gain + dividend

= -819.8577 +1156.2474

= 336.3897.
Rate of return on investment= total gain X 100

Investment

= 336.3897 X 100

7000

= 4.8055 %

On the instruction of Mr. rabbi, Magnum Insta cash Fund-Cash option”

executed an S.I.P. And invested Rs 5000 each on the 10 th of each month
from September 07 to January 08. The N.A.V. for the five days were
Rs. 17.3480, Rs. 17.4521, Rs. 17.5647, Rs. 17.6679 and Rs. 7.7871
respectively . Find the average acquisition cost per unit upto r4 decimal
places. There was no entry load.

Average Acquisition Cost = Total Investment

Total Number of Unit

Number of unit = investment

P.P. of 1 unit
Month Amount N.A.V No.of Unit
Sep.07 5000 17.3480 5000 = 288.2176
17.3480
Oct.07 5000 17.4521 5000 = 286.4984
17.4521
Nov.07 5000 17.5647 5000 = 284.6618
17.5647
Dec.07 5000 17.6679 5000 = 282.9991
17.6679
Jan.08 5000 17.7871 5000 = 281.1025
17.7871
Total Amt=25000 Total No.of Unit=1423.4794

Average Acquisition Cost = Total Investment

Total Number of Unit

= 25000

1423.4794

= 17.5626.