Question:medium
Students of an MBA school have got together to constitute a fund where each student has contributed Rs. 10000. This group of 20 students laid down certain rules for investment where it was agreed that 50 percent of the fund would be invested in riskless government securities while the rest 50 percent would be invested in equities. At the end of the year the group realizes that the crash in the stock market has left them with zero return on equities but 1 percent dividend gain on the shares bought. The return on the riskless government security has been 7.8 percent in the last year. If the gains are to be divided equally, the gain per student is
Students of an MBA school have got together to constitute a fund where each student has contributed Rs. 10000. This group of 20 students laid down certain rules for investment where it was agreed that 50 percent of the fund would be invested in riskless government securities while the rest 50 percent would be invested in equities. At the end of the year the group realizes that the crash in the stock market has left them with zero return on equities but 1 percent dividend gain on the shares bought. The return on the riskless government security has been 7.8 percent in the last year. If the gains are to be divided equally, the gain per student is
Updated On: Aug 18, 2026
- 2.2 percent
- 4.4 percent
- 6.6 percent
- None of the option is correct
Show Solution
The Correct Option is B
Solution and Explanation
Step 1: Total fund \(=20\times10000=Rs.\ 200000\); half in each investment \(=Rs.\ 100000\).
Step 2: Gain from securities \(=100000\times7.8\%=7800\); gain from equity dividend \(=100000\times1\%=1000\).
Step 3: Total gain \(=8800\); per student \(=\frac{8800}{20}=440\), which is \(\frac{440}{10000}\times100=4.4\%\) of the contribution.
\[ \boxed{4.4\%} \]
Step 2: Gain from securities \(=100000\times7.8\%=7800\); gain from equity dividend \(=100000\times1\%=1000\).
Step 3: Total gain \(=8800\); per student \(=\frac{8800}{20}=440\), which is \(\frac{440}{10000}\times100=4.4\%\) of the contribution.
\[ \boxed{4.4\%} \]
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