Q.Find the yield on 9% stock bought at 90 (i.e. ₹100 nominal of the stock costs ₹90 in the market).

For stock quoted per ₹100 nominal, a quotation 'at 90' means ₹100 of stock costs ₹90, and the fixed interest of ₹9 is earned on the ₹100 nominal.

Understanding the quotation. "9% stock at 90" means: ₹100 of nominal stock pays 9% interest = ₹9 per year, and ₹100 of that nominal stock can be bought for ₹90 in the market.

So for every ₹90 actually invested, the annual income is ₹9.

$\text{Yield}\% = \dfrac{\text{Income}}{\text{Amount invested}}\times100 = \dfrac{9}{90}\times100 = 10\%$ …

Cross-check on a larger amount. Suppose ₹9,000 is invested. Nominal stock bought $= \dfrac{9000}{90}\times100 = ₹10{,}000$ nominal. Annual interest $= 9\%\text{ of }10000 = ₹900$. Yield $= \dfrac{900}{9000}\ti …

A common error is treating '9% stock at 90' as a share priced at ₹90 with a 9% dividend on ₹90. Stock is always quoted per ₹100 of nominal value, so the ₹9 interest is on the …