Mr. D'souza purchased 200 shares of FV Rs. 50 at a premium of Rs. 100. He received 50% dividend on the shares. After receiving the dividend he sold 100 shares at a discount of Rs. 10 and remaining shares were sold at a premium of Rs. 75. For each trade he paid the brokerage of Rs. 20. Find whether Mr. D'souza gained or incurred a loss? by how much?

Given:

Number of shares Mr. D’souza purchased = 200

FV = Rs. 50

Premium = Rs. 100

We know that if MV > FV, then the share is at premium.

∴ MV = FV + Premium

⇒ MV = 50 + 100 = Rs. 150

Cost of 1 share = MV + Brokerage

= 150 + 20 = 170

We know that Investment (Total Value) = Cost × Number of shares

∴ Investment = 170 × 200 = Rs. 34, 000

We know that dividend per share =

∴ Dividend per share =

= Rs. 25

∴ Total dividend received = 200 × 25 = Rs. 5000

Brokerage on each trade is Rs. 20.

100 shares were sold at a discount of Rs. 10.

We know that if MV < FV, then the share is at discount.

∴ FV – Discount = MV

⇒ MV = 50 – 10 = Rs. 40

We know that cost of 1 share = MV + Brokerage

∴ Cost of 1 share = 40 + 20 = Rs. 60

∴ Coast of 100 shares = 60 × 100 = Rs. 6000

Another 100 shares were sold at a premium of Rs. 75.

∴ MV = FV + Premium

⇒ MV = 50 + 75 = Rs. 125

We know that cost of 1 share = MV + Brokerage

∴ Cost of 1 share = 125 + 20 = Rs. 145

∴ Cost of 100 shares = 145 × 100 = Rs. 14, 500

Mr. D’souza’s income = 5000 + 6000 + 14500 = Rs. 25, 500

Investment = 34, 000

Loss = 34, 000 – 25, 500 = Rs. 8, 500