How much stock must be purchased at 90 to generate an annual income of Rs. 1200 from a 12% stock?

Explanation

Since the stock pays 12% dividend, Rs. 100 of stock yields Rs. 12 annually. To earn Rs. 1200, the face value of stock required is (100 × 1200) / 12 = Rs. 10,000. Considering the stock is purchased at 90, the amount to invest is Rs. 10,000 × 90% = Rs. 9,000, but since the question asks for the face value, the answer is Rs. 10,000.