Effective yield from quote: What is the income (yield %) derived from holding a 5.5% stock quoted at 95 (per ₹100 nominal)?

Introduction / Context:Coupon is paid on nominal value, but yield depends on the price paid. Here the stock pays ₹5.50 per ₹100 nominal, and the investor pays ₹95. We compute the yield percentage, not merely the rupee dividend.

Given Data / Assumptions:

• Coupon rate = 5.5% ⇒ Dividend per ₹100 nominal = ₹5.50.
• Quoted price = ₹95 per ₹100 nominal.
• Asked: income as a percentage yield on the investment.

Concept / Approach:Yield % = (Dividend per unit / Market price per unit) * 100.

Step-by-Step Solution:Dividend per ₹100 = ₹5.50.Market price per ₹100 = ₹95.Yield % = (5.50 / 95) * 100 = 5.789473...% ≈ 5.79%.

Verification / Alternative check:If you invest ₹95, you receive ₹5.50 annually. That ratio is approximately 0.0578947, i.e., 5.79% when expressed as a percentage.

Why Other Options Are Wrong:

• “Rs. 5.50” and “Rs. 5” are rupee amounts, not percentage yields.
• “Rs. 5.28” is neither the correct yield nor a clearly defined metric here.

Common Pitfalls:

• Confusing dividend in rupees with yield in percent; yield must use market price in the denominator.

Final Answer:None of these