Q.A person invests in 300 shares of face value ₹10 each at a market price of ₹15 per share, with the company declaring a dividend of 20%. Find

Investment uses market value; dividend income uses face value; divide income by investment to find the actual rate of return.

Investment $=300\times15=4500$. Income $=300\times10\times0.20=600$. Return $=\dfrac{600}{4500}\times100\approx13.33\%$.

Step 1 — Find the total investment (uses market value). $\text{Investment} = 300\times15 = 4{,}500$.

Step 2 — Find the annual dividend income (uses face value). $\text{Income} = 300\times10\times\dfrac{20}{100} = 3000\times0.20=600$.

Step 3 — Find the rate of return.

Independent check. Since the share was bought at a premium (market price ₹15 is above the ₹10 face value), the chapter's rule predicts the actual return should fall below the nominal dividend rate of $20\%$. The computed rate of return, $13.33\%$, is indeed well below $20\%$ — confirming the premium-purchase reasoning.

Using the ₹10 face value instead of the ₹15 market price to compute the investment (or, conversely, using ₹15 instead of ₹10 to compute the dividend income) is the classic reversed-value error in this topic — face value and market value each belong to exactly one of the two calculations, never the other.