Business Mathematics and Basic Statistics · Ch 2 — Shares and Dividends

Number of Shares Purchasable and Portfolio Income

How many shares can a given investment buy?

Since $\text{Investment} = n \times \text{Market Value}$ , the number of shares $n$ purchasable for a given investment amount $I$ is found by rearranging:

n = \frac{\text{Investment}}{\text{Market Value per share}} = \frac{I}{M}

This is always a WHOLE number of shares in practice (shares are not sold in fractions on a standard exchange trade), so a genuine textbook-style problem is constructed so that $I/M$ divides evenly.

Total income from a single holding

Once the number of shares purchasable is known, the annual dividend income from that single holding follows directly from the dividend formula (Section 2):

\text{Income} = n \times \frac{r}{100} \times F

Income from a share portfolio

A portfolio is simply a collection of holdings in more than one company's shares. The total dividend income from a portfolio is the SUM of the dividend income earned from each individual holding — each holding is worked out separately (each company has its OWN face value, dividend rate, and number of shares held), then added together:

\text{Total Portfolio Income} = \sum_{i} n_i \times \frac{r_i}{100} \times F_i

Note

Never mix up face values across companies …

Definition 1Number of Shares Purchasable

For an investment amount $I$ at market value $M$ per share: $n = I / M$ . In a genuine problem this always works o …

Definition 2Portfolio Income

The total dividend income from holdings in more than one company: each holding's income ( $n_i \times \frac{r_i}{100} \times F_i$ ) is computed separately using that company's OWN face value and rate, t …

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