Question

How much money will be required to buy 200, Rs.25 shares at a premium of Rs.2?
A.Rs.5400
B.Rs.2400
C.Rs.3400
D.Rs.4400

Answer 1

Hint: This question is related to shares and prices. They are given the original share price with the premium prices and asked to find the amount required to buy 200 shares. For that we will first get the value of each share with its premium and multiply it with 200.

Complete step-by-step answer:
Given that, nominal value of each share is Rs.25
But they have given the premium value of each share as Rs.2
So the exact value to buy each share will be \[25 + 2 = Rs.27\]
Now 200 shares are to be bought.
So the total amount or money we can say required will be \[27 \times 200 = Rs.5400\]
Thus the correct option will be A.
So, the correct answer is “Option A”.

Note: Note that if premium is not considered then the money required will be \[25 \times 200 = Rs.5000\]
But we have to add the premium value and not of one share, rather of all shares.
Share premium or premium value of a share is the amount received by a company over and above the face value of its shares. When issuance of shares is at a price higher than face value, we shall call this excess amount to be premium.