Question

If the face value of a share is Rs.100 and market value is Rs75, then which of the following statements is correct?
$
  (a){\text{ The share is at premium of Rs175}} \\
  {\text{(b) The share is at discount of Rs25}} \\
  {\text{(c) The share is at a premium of Rs25}} \\
  {\text{(d) The share is at discount of Rs75}} \\
 $

Answer 1

Hint – In this question the face value of the share is higher than the market value of the share, this means that the share is on discount, use this concept to get the right discount onto which the share is available.

Complete step-by-step answer:
Given data
Face value of the share = Rs. 100
Market value of the share = Rs. 75
Now as we see that the market value is less than the face value so share is on discount.
So the discount value is the difference of face value and market value.
Therefore discount = 100 – 75 = Rs. 25
Therefore the share is at a discount of Rs. 25.
So this is the required answer.
Hence option (B) is correct.

Note – Market value per share is the current value at which the stock is trading in the market whereas face value is the value of shares listed by the company in its books or documents. So the discount is the difference between its face value and market value if it is positive than the share is on discount and if the difference is negative than the share is on profit so the difference value is +25 so the share is at discount of Rs. 25 which is the required answer.