Stocks and Shares – Purchase quantity with brokerage included How much nominal stock (face value) can be purchased for Rs. 794.50 when the market quote is 112.5 (i.e., Rs. 112.50 for every Rs. 100 of stock) and the brokerage is 1% on the purchase?

Introduction / Context:
This problem tests core ideas in stocks-and-shares arithmetic: translating a quoted price (above or below par) into the effective purchase price per Rs. 100 of stock after including brokerage, and then determining how much nominal (face value) stock can be acquired with a given cash outlay.

Given Data / Assumptions:

• Total money available to invest (cash outlay) = Rs. 794.50
• Quoted price = 112.5, meaning Rs. 112.50 for each Rs. 100 nominal
• Brokerage on purchase = 1% (assume on market price)
• We must find the nominal (face value) of stock that can be bought.

Concept / Approach:
The cost per Rs. 100 nominal includes market price plus brokerage on that market price. Effective price per Rs. 100 nominal = 112.50 + 1% of 112.50. Once we have this per-100 figure, we divide the available cash by this effective price and then scale to nominal face value.

Step-by-Step Solution:
Effective price per Rs. 100 = 112.50 + (1% of 112.50)= 112.50 + 1.125 = Rs. 113.625 per Rs. 100 nominalNominal purchasable = (794.50 / 113.625) * 100 ≈ Rs. 699.23 nominalRounding to the nearest reasonable figure for discrete trading lots ≈ Rs. 700 nominal

Verification / Alternative check:
Check by cost: Rs. 700 nominal would approximately cost (700/100)*113.625 = Rs. 795.38, extremely close to the available Rs. 794.50, which supports the rounded trading figure.

Why Other Options Are Wrong:
Rs. 706 and Rs. 690 deviate more from the computed 699.23. Rs. 650 and Rs. 485 are far too low to exhaust the budget at the given quote and brokerage.

Common Pitfalls:
Forgetting to add brokerage to the market quote; or incorrectly applying brokerage on par rather than on the market price for purchases.

Final Answer:
Rs. 700