Realization from premium stock price How much nominal stock must be sold to realize Rs. 7350 when the quoted price is 105 (i.e., Rs. 105 per Rs. 100 nominal)?

Introduction / Context:Here we reverse the usual calculation. Instead of finding money realized from a known nominal amount, we are given the cash to be realized and the market price, and we must find the corresponding nominal (face) value of stock to sell.

Given Data / Assumptions:

• Total cash required = Rs. 7350.
• Quoted price = 105 means Rs. 105 per Rs. 100 nominal.
• No brokerage or taxes are mentioned; we assume none.

Concept / Approach:Money realized = (Quoted price / 100) * Nominal. Therefore, Nominal = Money realized * 100 / Quoted price. Since price is at a premium, the nominal needed is less than the money realized.

Step-by-Step Solution:Let N be the nominal to sell.Realization formula: 7350 = (105/100) * N.Rearrange: N = 7350 * 100 / 105.Compute: 735000 / 105 = 7000.Hence nominal stock to be sold = Rs. 7000.

Verification / Alternative check:Check forward: (105/100) * 7000 = 1.05 * 7000 = 7350, which matches the target cash amount exactly.

Why Other Options Are Wrong:Rs. 7,500 would realize too much money at the given price;Rs. 6,920 or Rs. 6,400 would realize less than Rs. 7350 when multiplied by 1.05;Rs. 7,350 is the cash, not the nominal.

Common Pitfalls:Confusing nominal with market value, or erroneously subtracting/adding premiums. Always apply the linear relation: Cash = (Price% of par) * Nominal.

Final Answer:Rs. 7,000