Q.The dividend on a share is always calculated on its:

The dividend rate is applied to the fixed value printed on the certificate, which stays constant regardless of the trading price.

The correct option is (b) face (nominal) value.

The dividend rate is, by definition, applied to the fixed value printed on the share certificate: $\text{Dividend} = \dfrac{r}{100}\times FV$. A 10% dividend on a ₹100 share is always ₹10, whatever the share is trading at.

Why the other options are wrong:

• (a) market value — the market value fixes the amount invested and the number of shares bought, not the dividend. If the dividend were on market value it would change every day as the price moved, which is not how dividends work. …

Confusing the base for dividend (face value) with the base for yield (amount invested / market value) is the recurring error in this whole chapter. Keep th …