A 12% stock is providing an investor a 10% yield on his money. At what market price per Rs. 100 nominal is this stock quoted?

Introduction / Context:
This question is a straightforward application of the relationship between dividend rate, market price, and yield. A 12% stock paying dividend on its nominal value produces a 10% return on the investor's money when bought at a certain market price. We must find that quoted price per Rs. 100 nominal.

Given Data / Assumptions:

• Dividend rate = 12% stock, so dividend on Rs. 100 nominal = Rs. 12 per year.
• Yield on investment (actual return) = 10% per year.
• No brokerage is mentioned, so we ignore any additional charges.
• Nominal value for comparison is taken as Rs. 100.

Concept / Approach:
The yield on investment is given by:
yield % = (dividend per share / market price per share) * 100 Here, dividend per share (on Rs. 100 nominal) is Rs. 12, and the desired yield is 10%. We substitute into the formula and solve for the market price P. Rearranging gives:
P = (dividend per share * 100) / yield %

Step-by-Step Solution:
Step 1: Dividend per Rs. 100 nominal = 12% of 100 = Rs. 12. Step 2: Desired yield on investment = 10%. Step 3: Let P be the market price per Rs. 100 nominal. Step 4: Use formula: 10 = (12 / P) * 100. Step 5: Rearrange: 12 / P = 10 / 100 = 0.10. Step 6: Therefore, P = 12 / 0.10 = Rs. 120.

Verification / Alternative check:
If an investor buys the stock at Rs. 120 and receives a dividend of Rs. 12 per Rs. 100 nominal, then yield on investment = (12 / 120) * 100 = 10%, exactly as required in the problem statement. This confirms that the quoted price must be Rs. 120.

Why Other Options Are Wrong:
At Rs. 67 or Rs. 100, the yield would be higher than 10% since the same dividend would be obtained for less investment. At Rs. 110 or Rs. 112, the yield would be slightly more than or less than 10%, but not exactly 10%. Only at Rs. 120 does the yield match the given 10% return on investment.

Common Pitfalls:
A common error is to assume that the percentage printed on the stock certificate (12%) is automatically the yield, ignoring the effect of buying at a premium or discount. Another mistake is reversing the ratio and computing 120 / 10 instead of using the correct formula. Always remember that yield is dividend divided by market price multiplied by 100.

Final Answer:
The stock is quoted at a market price of Rs. 120 per Rs. 100 nominal value.