Question

The stock that Mr. Ames bought cost him $80 a share. The par value of the stock is $100. If the stock pays $6 a year in dividends, what rate of interest is Mr. Ames getting on his money?

A.16 2/3%
B.7 1/2%
C.3%
D.6%
E.None of the above


Personally, what made the problem confusing is of the "par value"....But please answer if you had any thoughts and comments!

Answer 1

Here are some explanations of par value.

https://www.google.com/#q=par+value+of+the+stock

Note that most stocks don't have a par value. Is your question way out of date?

How about this solution?

100 (6/80) = _______%

Answer 2

He bought it for $80
As far ads I know the "par value" is of only academic interest.

100 * 6/80 = 7.5 %

Answer 3

I do believed the question was about 5 years old. Thanks though!!!!