A 9% stock yields 8%. The market value of the stock is

### Concept & Stock Yield Calculation The market value of a stock can be determined if you know the dividend rate and the required yield. The dividend is fixed to the face value, while yield is fixed to the market value. $$ \text{Market Value} = \frac{\text{Dividend}}{\text{Yield}} \times 100 $$ ### Step-by-Step Solution * **Given:** Dividend = 9% (₹ 9 per ₹ 100 share), Yield = 8%. * **Step 1: Apply the relationship.** Market Value = $\frac{9}{8} \times 100$ * **Step 2: Calculate.** $\frac{9}{8} = 1.125$ $1.125 \times 100 = 112.50$ ### Exam Strategy & Shortcut Whenever the dividend percentage is higher than the yield percentage, the stock must be selling at a premium (above ₹ 100). $\frac{9}{8} = 1 + \frac{1}{8}$. Since $\frac{1}{8} = 12.5\%$, the premium is ₹ 12.50, meaning the price is ₹ 112.50. ### Common Pitfall Multiplying instead of dividing (e.g., $9 \times 8 = 72$), which falsely leads to option (a). ### Final Answer Therefore, the correct answer is **₹ 112.50**.