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1. A retired man sells out Rs. 7500 of a 10% stock at Rs. 105.50 and invests the proceeds in 14% stock at Rs. 124.50. What is the change in income if he pays a service charge of 0.5% of the face value on each transaction ?

Solution:
Number of shares sold = 7500100   = 75
Proceeds from sale of Rs. 7500 stock
= Rs. [(105.50 - 0.5) × 75]
= Rs. 7875
Number of new shares purchased
=(7875124.50+0.50)=(7875125)=63
Original income
= 10% of Rs. 7500
= Rs. 750
New income
= 14% of Rs. 6300
= Rs. (14100×6300)  
= Rs. 882
∴ Change in income
= Rs. (882 - 750)
= Rs. 132

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