Ms . Bharati Purchased 5% Share Of Company Of Face Value Rs 100 At The Market Price Of Rs. 150 By Investing Rs 10000 . Find The Total Dividend Received
Introduction
In this article, we will explore the concept of share capital and dividend received by an investor in a company. We will use the scenario of Ms. Bharati, who has invested in a company by purchasing 5% of its shares at a market price. We will calculate the total dividend received by Ms. Bharati based on her investment.
Understanding Share Capital
Share capital refers to the amount of money raised by a company through the issue of shares to its shareholders. The face value of a share is the nominal value at which it is issued, while the market price is the current price at which the share is traded in the market. In this scenario, Ms. Bharati has purchased 5% of the company's shares at a market price of Rs. 150, which is higher than the face value of Rs. 100.
Calculating the Number of Shares Purchased
To calculate the number of shares purchased by Ms. Bharati, we need to divide the amount invested by the market price of each share.
Number of shares purchased = Amount invested / Market price per share
= Rs. 10,000 / Rs. 150
= 66.67 shares
Since Ms. Bharati cannot purchase a fraction of a share, we will round down to the nearest whole number, which is 66 shares.
Calculating the Dividend Received
The dividend received by an investor is a portion of the company's profit distributed to its shareholders. To calculate the dividend received, we need to know the dividend percentage declared by the company. Let's assume the company has declared a dividend of 10% on its face value.
Dividend per share = Face value x Dividend percentage
= Rs. 100 x 10%
= Rs. 10
Since Ms. Bharati has purchased 66 shares, the total dividend received by her will be:
Total dividend received = Dividend per share x Number of shares purchased
= Rs. 10 x 66
= Rs. 660
Conclusion
In this article, we have calculated the total dividend received by Ms. Bharati based on her investment in a company. We have used the scenario of Ms. Bharati purchasing 5% of the company's shares at a market price of Rs. 150. We have calculated the number of shares purchased and the dividend received per share, and then calculated the total dividend received by Ms. Bharati.
Key Takeaways
- Share capital refers to the amount of money raised by a company through the issue of shares to its shareholders.
- The face value of a share is the nominal value at which it is issued, while the market price is the current price at which the share is traded in the market.
- The dividend received by an investor is a portion of the company's profit distributed to its shareholders.
- To calculate the dividend received, we need to know the dividend percentage declared by the company and the number of shares purchased.
Frequently Asked Questions
- What is the difference between face value and market price of a share?
- The face value of a share is the nominal value at which it is issued, while the market price is the current price at which the share is traded in the market.
- How is the dividend received by an investor calculated?
- The dividend received by an investor is calculated by multiplying the dividend per share by the number of shares purchased.
- What is the significance of the dividend percentage declared by a company?
- The dividend percentage declared by a company determines the amount of profit distributed to its shareholders.
References
Glossary
- Share capital: The amount of money raised by a company through the issue of shares to its shareholders.
- Face value: The nominal value at which a share is issued.
- Market price: The current price at which a share is traded in the market.
- Dividend: A portion of the company's profit distributed to its shareholders.
- Dividend percentage: The percentage of profit distributed to shareholders.
Ms. Bharati's Investment in Company Shares: Q&A =====================================================
Introduction
In our previous article, we explored the concept of share capital and dividend received by an investor in a company. We used the scenario of Ms. Bharati, who has invested in a company by purchasing 5% of its shares at a market price. We calculated the total dividend received by Ms. Bharati based on her investment. In this article, we will answer some frequently asked questions related to Ms. Bharati's investment in company shares.
Q&A
Q1: What is the difference between face value and market price of a share?
A1: The face value of a share is the nominal value at which it is issued, while the market price is the current price at which the share is traded in the market. For example, if a company issues a share with a face value of Rs. 100, but the market price is Rs. 150, the investor will have to pay Rs. 150 to purchase the share.
Q2: How is the dividend received by an investor calculated?
A2: The dividend received by an investor is calculated by multiplying the dividend per share by the number of shares purchased. For example, if the dividend per share is Rs. 10 and the investor has purchased 66 shares, the total dividend received will be Rs. 660.
Q3: What is the significance of the dividend percentage declared by a company?
A3: The dividend percentage declared by a company determines the amount of profit distributed to its shareholders. For example, if a company declares a dividend of 10% on its face value, the investor will receive Rs. 10 as dividend for every Rs. 100 invested.
Q4: Can an investor purchase a fraction of a share?
A4: No, an investor cannot purchase a fraction of a share. If the amount invested is not a multiple of the market price, the investor will have to purchase the nearest whole number of shares.
Q5: How does the market price of a share affect the dividend received by an investor?
A5: The market price of a share does not affect the dividend received by an investor. The dividend received is based on the face value of the share and the dividend percentage declared by the company.
Q6: Can an investor sell a share before the dividend is declared?
A6: Yes, an investor can sell a share before the dividend is declared. However, the investor will not receive the dividend if the share is sold before the dividend is declared.
Q7: How does the dividend received by an investor affect the company's profit?
A7: The dividend received by an investor is a portion of the company's profit distributed to its shareholders. The company's profit is reduced by the amount of dividend declared.
Q8: Can a company declare a dividend without making a profit?
A8: No, a company cannot declare a dividend without making a profit. The company must have sufficient profits to declare a dividend.
Q9: How does the dividend percentage declared by a company affect the company's stock price?
A9: The dividend percentage declared by a company can affect the company's stock price. A higher dividend percentage can increase the stock price, while a lower dividend percentage can decrease the stock price.
Q10: Can an investor receive a dividend if the company is in loss?
A10: No, an investor cannot receive a dividend if the company is in loss. The company must have sufficient profits to declare a dividend.
Conclusion
In this article, we have answered some frequently asked questions related to Ms. Bharati's investment in company shares. We have discussed the difference between face value and market price of a share, the calculation of dividend received by an investor, and the significance of the dividend percentage declared by a company. We have also discussed other related questions and provided answers to help investors understand the concept of share capital and dividend received.
Key Takeaways
- The face value of a share is the nominal value at which it is issued, while the market price is the current price at which the share is traded in the market.
- The dividend received by an investor is calculated by multiplying the dividend per share by the number of shares purchased.
- The dividend percentage declared by a company determines the amount of profit distributed to its shareholders.
- An investor cannot purchase a fraction of a share.
- The market price of a share does not affect the dividend received by an investor.
- An investor can sell a share before the dividend is declared, but will not receive the dividend if the share is sold before the dividend is declared.
References
Glossary
- Share capital: The amount of money raised by a company through the issue of shares to its shareholders.
- Face value: The nominal value at which a share is issued.
- Market price: The current price at which a share is traded in the market.
- Dividend: A portion of the company's profit distributed to its shareholders.
- Dividend percentage: The percentage of profit distributed to shareholders.