Find the total cost of purchasing Rs 6400 nominal value of 10 percent stock quoted at 15 percent discount in the market.

Introduction / Context: This is another important stocks and shares question where you are asked to calculate the total cost of buying a given nominal amount of stock when it is available at a discount. A discount means that the market price is lower than the nominal (face) value, and this directly reduces the investment needed for a fixed nominal amount. Given Data / Assumptions:

• Nominal value of stock to be purchased = Rs 6400
• Dividend rate = 10 percent (not necessary for cost calculation)
• Stock is quoted at 15 percent discount
• Nominal value per share is assumed to be Rs 100

Concept / Approach: A 15 percent discount on a Rs 100 nominal share means the market price per share is 100 - 15 = Rs 85. To find the cost of Rs 6400 nominal value, we scale the price accordingly. The basic relation is: Cost price = Nominal value * (Market price per 100 nominal / 100). This converts nominal value into actual money paid with discount applied. Step-by-Step Solution: Step 1: Discount = 15 percent, so market price of Rs 100 nominal stock = 100 - 15 = Rs 85. Step 2: Total nominal value required = Rs 6400. Step 3: Cost price = 6400 * 85 / 100. Step 4: 6400 * 85 / 100 = 64 * 85 = 5440. Step 5: Therefore cost of Rs 6400 nominal 10 percent stock at 15 percent discount is Rs 5440. Verification / Alternative check: We can also think in terms of per share. If nominal value per share is Rs 100, number of shares corresponding to Rs 6400 nominal value is 6400 / 100 = 64 shares. Each share costs Rs 85 in the market. Therefore investment = 64 * 85 = 5440, which confirms the previous calculation. Why Other Options Are Wrong:

• Rs 2000: This is far too low and ignores the actual nominal value.
• Rs 6000: This would correspond to a smaller discount than 15 percent.
• Rs 5140: This appears random and does not equal 64 * 85.

Common Pitfalls:

• Applying 15 percent discount on 6400 incorrectly as 6400 - 15 instead of 15 percent of 6400.
• Confusing discount with premium and adding instead of subtracting.
• Dividing instead of multiplying when converting nominal value to cost.

Final Answer: The total cost of the investment is Rs 5440.