Critical Thinking Questions: Shares and Dividend

Statements Based Questions

Q1: What does it mean when a share is selling at a discount?
Statement 1: The market value of the share is less than its face value. 
Statement 2: The share is likely to provide less dividend income. 
Statement 3: The share is selling for less than its nominal value.
(a) Only 1 
(b) Only 3 
(c) Only 1 and 3 
(d) All 1, 2, and 3

Q2: Which of the following statement is true?
Statement 1: If a share of face value ₹100 is selling at ₹88, it is said to be selling at a premium. 
Statement 2: A dividend is a part of the company's profit distributed to shareholders based on the number of shares held. 
Statement 3: The market value of a share can be less than, equal to, or more than its nominal value.
(a) Only 1 
(b) Only 2 
(c) Only 2 and 3 
(d) All 1, 2, and 3

Q3: Mr. Gupta invested in 200 shares of a company, each with a face value of ₹100. The company declared a 10% dividend this year. His income from dividends is ₹2000. Which of the following statement is true?
Statement 1: The market value of shares is irrelevant in calculating the income from dividends. 
Statement 2: Mr. Gupta's income from dividends is ₹2000. 
Statement 3: If the dividend rate was 15%, his income would have been ₹3000.
(a) Only 1 
(b) Only 2 
(c) Only 1 and 2 
(d) All 1, 2, and 3

Q4: An investor buys 50 shares at a premium of ₹20, where each share's face value is ₹100. The company declares a 5% dividend. Which of the following statement is true?
Statement 1: The premium paid affects the calculation of income from dividends. 
Statement 2: The total income from dividends is ₹250. 
Statement 3: If the dividend rate was 10%, the income would be ₹500.
(a) Only 2 
(b) Only 3 
(c) Only 1 and 2 
(d) Only 2 and 3

Q5: A company with a face value of ₹10 per share declares a 20% dividend. A person holds 300 shares. Which of the following statement is true?
Statement 1: Income from dividends is independent of the market value of shares. 
Statement 2: The person's income from dividends is ₹600. 
Statement 3: Buying more shares at the same dividend rate will increase the income proportionally.
(a) Only 1 and 2 
(b) Only 2 and 3 
(c) Only 3 
(d) All 1, 2, and 3

Q6: An investor owns 100 shares of a company with a face value of ₹50 each. If the rate of dividend is 8%,  Which of the following statement is true?
Statement 1: The income from dividends is affected by the market value of the shares. 
Statement 2: The investor's income from dividends is ₹400. 
Statement 3: If the face value of each share was ₹100, the income would remain the same.
(a) Only 2 
(b) Only 1 and 3 
(c) Only 2 and 3 
(d) Only 1

Q7: A shareholder has 150 shares in a company, where the face value of each share is ₹200. The company announces a dividend of 6%. Which of the following statement is true?
Statement 1: A higher face value per share results in higher income from dividends for the same dividend rate. 
Statement 2: The shareholder's income from these dividends is ₹1800. 
Statement 3: If the dividend rate was reduced to 3%, his income would be ₹900.
(a) Only 1 and 2 
(b) Only 2 and 3 
(c) Only 1 and 3 
(d) All 1, 2, and 3

Q8: An investor purchases 80 shares of a company at a market value of ₹150 per share, where the face value is ₹100. The company declares a dividend of 7%. Which of the following statement is true?
Statement 1: The income from dividends is ₹560. 
Statement 2: The market value of the shares affects the dividend income. 
Statement 3: If the investor had purchased 160 shares instead, his income would be ₹1120.
(a) Only 1 and 3 
(b) Only 1 
(c) Only 2 
(d) All 1, 2, and 3

Q9: A shareholder holds 200 shares of a company, each with a face value of ₹50. The company announces a dividend of 5%. Which of the following statement is true?
Statement 1: The shareholder's income from dividends is ₹500. 
Statement 2: A higher rate of dividend would increase the income proportionally. 
Statement 3: The number of shares does not impact the income from dividends.
(a) Only 1 and 2 
(b) Only 1 
(c) Only 2 and 3 
(d) Only 1 and 3

Q10: An investor buys shares at a premium of ₹30 per share, where the face value is ₹120 and the dividend declared is 6%. If she owns 100 shares, Which of the following statement is true?
Statement 1: The investor's income from dividends is ₹720. 
Statement 2: The premium paid on shares affects the income from dividends. 
Statement 3: If the dividend rate was 12%, her income would be ₹1440.
(a) Only 1 
(b) Only 1 and 3 
(c) Only 2 
(d) All 1, 2, and 3