Infer the dividend rate from investment and income A man invested Rs. 388 in a stock quoted at 97 and received an annual income of Rs. 22. What is the dividend rate of the stock?

Introduction / Context:
This item asks you to back out the dividend rate (on nominal) from the amount invested, the market quotation, and the rupee income received. The key step is to infer how much nominal was acquired for the given cash outlay at the quoted price.

Given Data / Assumptions:

• Investment (cash) = Rs. 388.
• Quoted price = 97 per 100 nominal.
• Annual income received = Rs. 22.
• No brokerage considered.

Concept / Approach:
Nominal purchased = (Investment / Price per 100) * 100. Then Dividend rate (%) = (Income / Nominal) * 100. This returns the stock’s declared percentage on face value.

Step-by-Step Solution:
Nominal = (388 / 97) * 100 = 4 * 100 = Rs. 400 nominal.Dividend rate = Income / Nominal * 100 = 22 / 400 * 100 = 5.5% = 5 1/2%.

Verification / Alternative check:
If the stock had a 5.5% dividend, Rs. 400 nominal would pay Rs. 22 annually, matching the observed income, confirming the rate.

Why Other Options Are Wrong:
3% and 6% do not produce Rs. 22 on Rs. 400 nominal; 12% and 22.68% are far off and reflect misinterpretations of price vs. nominal.

Common Pitfalls:
Mixing up nominal and investment or applying the dividend to the invested cash rather than to nominal face value.

Final Answer:
5 1/2%