Question

Find the number of shares received when Rs. 60,000 was invested in the shares of FV Rs 100 and MV Rs 120.

Answer 1

Hint: We know that the ratio of investment to the market value gives us the value of the number of shares. We should also know that the face value is denoted as FV and market value is denoted as MV. From the question, it was given that Rs. 60,000 is invested, the value of shares of face value (FV) is equal to Rs. 100 and the value of market value (MV) is equal to Rs. 120. So, by using these values we will calculate the number of shares.

Complete step-by-step answer:
Before solving the question, we should know that the ratio of investment to the market value gives us the value of the number of shares. We should also know that the face value is denoted as FV and market value is denoted as MV.

Let us assume the amount invested is equal to A and number of shares is equal to N.
\[\Rightarrow N=\dfrac{A}{M.V}.....(1)\]
From the question, it was given that Rs. 60,000 is invested, the value of shares of face value (FV) is equal to Rs. 100 and the value of market value (MV) is equal to Rs. 120.
So, we get that
\[\begin{align}
  & A=60,000.....(2) \\
 & F.V=100........(3) \\
 & M.V=120.......(4) \\
\end{align}\]
Now let us substitute equation (2) and equation (4) in equation (1), then we get
\[\begin{align}
  & \Rightarrow N=\dfrac{60,000}{120} \\
 & \Rightarrow N=500....(5) \\
\end{align}\]
Now from equation (5) it is clear that the number of shares are equal to 500.

Note: Some students have a misconception that the ratio of investment to the face value gives us the value of the number of shares.
Let us assume the amount invested is equal to A and number of shares is equal to N.
\[\Rightarrow N=\dfrac{A}{F.V}.....(1)\]
From the question, it was given that Rs. 60,000 is invested, the value of shares of face value (FV) is equal to Rs. 100 and the value of market value (MV) is equal to Rs. 120.
So, we get that
\[\begin{align}
  & A=60,000.....(2) \\
 & F.V=100........(3) \\
 & M.V=120.......(4) \\
\end{align}\]
Now let us substitute equation (2) and equation (3) in equation (1), then we get
\[\begin{align}
  & \Rightarrow N=\dfrac{60,000}{100} \\
 & \Rightarrow N=600....(5) \\
\end{align}\]
Now from equation (5) it is clear that the number of shares are equal to 600.
But we know that the number of shares are equal to 500. So, this type of misconception should get avoided.