SHARES AND MUTUAL FUNDS
Example 1
Mr.
Prashant invested Rs. 75,375/- to purchase equity shares of a company at market
price of Rs. 250 /- through a brokerage firm, charging 0.5% brokerage. The face
value of a share is Rs. 10/-. How many shares did Mr. Prashant purchase?
Example
2
Mr.
Sandeep received Rs. 4,30,272 /- after selling shares of a company at market
price of Rs. 720 /- through Sharekhan Ltd., with brokerage 0.4%. Find the
number of shares he sold.
Example
3
Ashus
Beauty World ' has issued 60,000 shares of par value of Rs. 10/- each. The company
declared a total dividend of Rs. 72,000 /- .
Find the rate of dividend paid by the company.
Example
4
The
capital of ABC Company consists of Rs. 15 lakhs in 6 % cumulative preference
shares of Rs. 100 each and Rs. 30 lakhs in equity shares of Rs.10/- each. The
dividends on cumulative preference shares for earlier year was not paid . This
year , the company has to distribute
profit of Rs . 3 lakh after keeping 20 % as reserve fund. Find the percentage
rate of dividend paid to the equity shareholders.
Example
5
Mr.
Dinesh bought some shares of a company which had a face value of Rs.100 /-. The
company declared a dividend of 15 % but Mr. Dinesh's rate of return on investment was only 12% .
At what market price did he purchase the shares ? There was no brokerage
involved .
Example 6: Comparison of two stocks
Mr.
Subu invested Rs. 20,000 /- in Rs. 100/- shares of company A at the rate of Rs.
125/- per share . He received 10 % dividend on these shares. Mr. Subu also
invested Rs. 24,000/- in Rs. 10/- shares of company B at Rs.12/- per share and
he received 15 % dividend. Which investment is more beneficial?
Example
7
Ms. Ashma Mehta bought
300 shares of a company of face value
Rs. 100/- each at a market price of Rs. 240 /- each . After receiving a
dividend at 8% , she sold the shares
at Rs . 256 /- each . Find her rate of return on investment. There was no
brokerage involved .
Example
8
Mr.
Joshi purchased 30 shares of Rs. 10/- each of Medi computers Ltd. on 20th Jan.
2007, at Rs. 36/- per share . On 3rd April 2007 , the company decided t split
their shares from the face value of Rs. 10/- per share to Rs. 2/- per share .
On 4th April 2007 , the market value of each share was Rs. 8/- per share . Find
Mr. Joshi's gain or loss , if he was to sell the shares on 4th April 2007? ( No
brokerage was involved in the transaction ).
Example 9
Rahul
purchased 500 shares of Rs. 100 of company A at Rs. 700 /-. After 2 months , he
received a dividend of 25 % . After 6 months, he also got one bonus share for
every 4 shares held . After 5 months , he sold all his shares at Rs. 610/-
each. The brokerage was 2% on both, purchases & sales . Find his percentage
return on the investment.
Example
11
Mr. Deore invested Rs. 25,000/- to
purchase 2,500 uits of ICICI MF - B plan on 4th April 2007 . He decided to sell
the units on 14th Nov. 2007 at NAV of Rs. 16.4 /-. The exit load was 2.5
% . Find his profit (Calculations are upto 2 decimal points)
Example
12
Ragini
invested Rs. 94,070/- in mutual Fund when NAV was Rs. 460 /- with entry load of
2.25 % . She received a dividend of Rs. 5/- per unit . She, later sold all
units of fund with an exit load of 0.5 % . If her gain was Rs. 1654/-, find NAV
at which she sold the units . (Calculations are upto 2 decimal points)
Example 13
If
a mutual fund had NAV of Rs. 28 /- at the beginning of the year and Rs. 38/- at the end of the year , find the
absolute change and the percentage change in NAV during the year .
Example
14
If
NAV was Rs. 72/- at the end of the year , with 12.5 % increase during the year
, find NAV at the beginning of the year .
Example 15
Rohit
purchased some units in open end equity fund at Rs. 16/- . The fund distributed
interim dividend of Rs. 5/- per unit , and the NAV of the fund at the end of
the year was Rs. 25/- . Find the total percentage return . (Calculations are
upto 2 decimal points)
Example 16
Mr.
Hosur purchased some units in open- end fund at Rs. 30/- and its NAV after 18
months was Rs. 45/- . Find the annualised change in NAV as a percentage Mr. Kamble purchased 586.909 units of
Kotak cash plus retail Growth on 1st June 2007 when the NAV was RS. 20.4461.
Its NAV as on 3rd December,
2007 was Rs. 21.1960/- . The fund has neither entry load nor an exit load. Find
the amount invested on 1st June 2007 and the value of Mr. Kamble's investment
on 3rd December 2007 .
Ans . 12,000 , 12440.12 .
EXTRA QUESTION’S
1.
Mr.
Amar invested Rs 1,20,480/- to buy equity shares of a company at market price
of Rs . 480 /- at 0.4 % brokerage . Find the No. of shares he purchased . Ans: 250
2.
Aditi
invested Rs. 19,890 /- to purchase shares of a company with face value of
Rs.10/- each , at market price of Rs. 130/- . She received dividend of 20 % as
well Afterwards , she sold these shares at market price of Rs. 180/- . She had
to pay brokerage of 2 % for both purchase and sales of shares. Find her net profit. Ans: No. of shares =150 , sales = 26460
, Dividend = 300 , purchase = 19,890, profit= 6870
3. Amol wants to invest
some amount in company A or company B , by purchasing equity shares of face
value of Rs. 10 /- each , with market price of R. 360/- and Rs. 470/-
respectively . The companies are expected to declare dividends at 20 % and 45%
respectively . Advise him on the choice of shares of company. Ans:
company B is a better choice .
4.
Find
the percentage gain or loss if 200 shares of face value Rs. 10/- were purchased at Rs . 350/- each and
sold later at Rs. 352 /- , the brokerage being 0.5 % on each of the transaction . Ans:
-0.43 % i.e. a loss of 43 %
5.
Find
the number of shares if the total dividend at 8% on the shares with face value
Rs.10/- was Rs. 240. Ans :- 300
6.
Ms
. Kannan purchased 113.151 units of 'FT India Prima Plus' on 9th April 2007 and
redeemed all the units on 7th Aug 2007 when the NAV was Rs. 35.5573 . The entry
load was 2.25 % and the exit load was 1 % . If she gained Rs. 483.11 , find the
NAV on 9th April 2007 . (Calculations are upto 2 decimal points) Ans . 30.2514
7.
Mr.
Pandit invested Rs. 10,000/- in Birla Sunlife Equity Fund- Divjdend plan ' on
10/07/2007 , when the NAV was Rs. 78.04 ,and redeemed all the units on
12/11/2007 when the NAV was Rs. 84.54 . In the
meanwhile , on 31/08/2007 , she had received a dividend @ Rs. 10 per unit . Find her total gain and the rate
of return considering loads as follows: The entry load was 2.25 % and the exit
load was 0.5 % The number of units were calculated correct upto 3 decimal
places.
Ans . Total gain = Rs .
1794.46, Rate of return = 17.94%
8.
Given
the following information , calculate NAV of the mutual fund :- No. of units =15000 Market value of investments in
Govt . securities = Rs. 20 lakhs Market value of investments in corporate Bonds
= Rs. 25 lakhs Other Assets of the fund = Rs. 15 lakhs Liabilities of the fund
= 6 lakhs
Ans . Rs. 360/- .
9.
Mumtaz
purchased 1200 units of TATA BIG Bond- G Rs. 12,000 /- on 14th April 2007 . She sold her units on
9th Dec 2007 at NAV of Rs. 15.36/- . The short term gain tax (STGT) was 10% of
the profit . Find her net profit . (Calculations upto 2 decimal points)
Ans . profit = 6432 , STGT =
643.2 , Net profit = 5788.8
MUTUAL FUND
Consider
the following example :-
Mr.
Shaikh keeps Rs. 5000/- on 3rd of every month for 4 months as follows
:-(Calculations are correct to 2 points of decimal)
|
Month
|
Amount
(in Rs.)
|
NAV
|
No. of units he gets
|
|
1
|
5000
|
109.48
|
5000/109.48=45.67
|
|
2
|
5000
|
112.36
|
5000/112.36=44.50
|
|
3
|
5000
|
108.14
|
5000/108.14 =46.24
|
|
4
|
5000
|
105.62
|
5000/105.62=47.34
|
|
Total
|
20,000
|
|
183.75
|
Avg price of units = 20,000 / 183.75 = 108.84
If
Mr. Shaikh would have invested the entire amount of Rs. 20,000/- 0n 3rd of
first month only , with NAV Rs. 109.48/- , the no. of units purchased would
have been 20,000/ 109.48 = 182.68
Thus he gained more units and average price of
units also was Rs.108.84 instead of Rs.109.48 which was NAV on 3rd of the first
month
If SIP is followed for a long period of time ,
it can create wealth to meet a person's
future needs like housing , higher education etc .
Now
, we will study the following examples to understand SIP .
Example
17
Mr.
Patil invested in a SIP of a M.F. , a
fixed sum of Rs. 10,000/- on 5th of every month , for 4 months . The NAV on these dates were Rs. 34.26 , 46.12 , 39.34 and 41.85 . The entry load
was 2.25 % through out the period . Find
the average price
, including the
entry load ,
using the Rupee-cost-Averaging method
.How does it compare with the Arithmetic mean of the prices ? (Calculations are
to 4 digits decimal)
Solution :
|
Month
|
NAV
|
Entry
load =
2.25%
|
Total price
|
No.ofunits=1000/Total
price
|
|
1
|
34.2600
|
0.7708
|
35.0308
|
285.4627
|
|
2
|
46.1200
|
1.0377
|
47.1577
|
212.0544
|
|
3
|
39.3400
|
0.8851
|
40.2252
|
248.6006
|
|
4
|
41.8500
|
0.9141
|
42.7916
|
233.6906
|
|
TOTAL
|
|
|
165.2053
|
979.8083
|
By using
Rupee-cost-Averaging method :- Avg Price = Total amount
Total
No. of units
= 40,000 = 40 .8243
979.8083
A.M. of price = Total price= 165.2053=
41.3013
4 4
Avg.
price using Rupee-cost- Averaging method is less than A.M. of prices .
Example
18
Mr. Desai invested Rs. 5000/- on 1st
of every month for 5 months in a SIP of a M.F.
with
NAV's
as
48.15
,
52.83
,41.28,
35.44 & 32.65 respectively .There was no entry
load charged . Find the average price , Mr. Desai paid using the Rupee-cost-Averaging method . After 6 months ,he sold all his units , when NAV
was Rs. 51.64 with contingent deferred sales charge (CDSC) as 2.25 % . Find his
net gain. (Calculations are correct to 2 digits decimal)
Example
19
Mr. Thomas started a SIP in 'HDFC
long term advantage Fund ' . On the 10th July , Aug and Sept 2007 he invested
Rs. 1000/- each at the NAVs Rs. 44.100, Rs. 43.761/-, s. 45.455 respectively .
The entry load was 2.25% . Find his average acquisition cost per unit upto 3
decimal places . (Calculations are up to 3 decimal points).
Ans. Rs. 45.427/- .
Example
20
Maneeshad
Rs. 20,000/- on 2nd of every month for 5 months
in a SIP of a mutual fund , with
NAVs as Rs. 53.12 , Rs. 56.26 , Rs. 48.86
,Rs.50.44 and Rs. 54.62 respectively . The entry load was 2.25 % throughout
this period .Find average price , including the entry load , using the
Rupee-cost -Averaging method and compare it with Arithmetic mean of prices . (Calculate up to 2 decimal points)
Ans
.
53.70 , 53.84 .
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