Income from stock purchased at par What is the annual income derived from Rs. 1800 nominal of 5% stock bought at 100 (par)?

Introduction / Context:
This tests the basic principle that dividends are paid on nominal (face) value, independent of the market purchase price. At par, the income equals the coupon percentage of the nominal held.

Given Data / Assumptions:

• Nominal held = Rs. 1800.
• Stock rate = 5%.
• Purchase at par (100) does not change the dividend on nominal.

Concept / Approach:
Annual income = Dividend rate * Nominal / 100. Here, 5% of 1800. Purchase price affects yield, not the rupee dividend on face value.

Step-by-Step Solution:
Income = 5/100 * 1800 = Rs. 90.

Verification / Alternative check:
Even if bought at premium or discount, the rupee dividend on Rs. 1800 nominal would still be 5% of 1800; only yield would differ. At par, the result remains Rs. 90.

Why Other Options Are Wrong:
Rs. 100, Rs. 110, Rs. 95, and Rs. 85 do not equal 5% of 1800.

Common Pitfalls:
Confusing nominal with amount invested. Dividends are proportional to nominal; market price influences return percentage, not absolute dividend on the face value.

Final Answer:
Rs. 90