Shares and Dividends - SS3 Mathematics Lesson Note

Companies usually generate funds for investments by selling shares to the public (individuals, corporations, and governments). These shares are called stocks and the buyers are called shareholders. Shares are usually denominated in a monetary form different from their price. This is the nominal or face value. The selling price is market or quoted price.

1. The nominal and market price are at par when they are same.

2. Where the market price is greater than face value, the quoted price is at premium price.

3. Where the market price is less than face value, the quoted price is at discount price.

At the end of the year, the profit or part of it is shared amongst the shareholders. This is called a dividend.

Example 9 If a shareholder bought shares worth \(N75,000\) with a face value of \(N1\) at \(N1.50\) per share. How much shares did he buy? If a dividend of ten percent is declared, how much dividend is received?

Solution

\[Number\ of\ shares\ bought\ = \ \frac{75000}{1.50} = 50,000\ shares\]

\[10\%\ dividend\ on\ the\ face\ value\ of\ shares\ held\ = \ 10\%\ of\ (50,000 \times N1)\]

\[= 10\%\ of\ 50,000\]

\[= N5,000\]