A `4%` stock yields `5%` . The market value of the stock is

Options

A. Rs 125
B. Rs 80
C. Rs 99
D. Rs 109

Answer

To find the market value of a 4% stock that yields 5%, we can follow these steps:

### Step 1: Understand the relationship between yield, dividend, and market value.
The yield of a stock is calculated using the formula:
\[ \text{Yield} = \frac{\text{Dividend}}{\text{Market Value}} \times 100 \]
Where:
- Dividend is the annual income from the stock.
- Market Value is the price at which the stock is currently sold in the market.

### Step 2: Substitute the known values into the yield formula.
Given:
- Dividend = 4% of the face value (let's assume the face value is Rs.100 for simplicity).
- Yield = 5%.

So, the dividend in terms of money is:
\[ \text{Dividend} = \frac{4}{100} \times 100 = Rs.4 \]

Now, substituting the values into the yield formula:
\[ 5 = \frac{4}{\text{Market Value}} \times 100 \]

### Step 3: Rearrange the formula to solve for Market Value.
Rearranging the equation gives:
\[ \text{Market Value} = \frac{4 \times 100}{5} \]

### Step 4: Calculate the Market Value.
Now, calculate the market value:
\[ \text{Market Value} = \frac{400}{5} = Rs.80 \]

### Conclusion:
The market value of the stock is Rs.80.

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