n NISM Certifications
XV NISM Series XV
Medium

Using the following data, determine the market price per share of a company: Total Assets: Rs. 50,00,000, Earnings Per Share (EPS): Rs. 2, Net Income: Rs. 4,00,000, Return on Equity: 20%, Price to Book Value: 5.

Practice question from NISM XV Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. Rs. 50

    Correct answer

  2. B

    Rs. 9

  3. C

    Rs. 35

  4. D

    Rs. 75

Why this is the answer

First, calculate the number of shares using EPS = Net Income / Number of Shares. This gives 2 = 4,00,000 / Number of Shares, so Number of Shares = 2,00,000. Next, find Book Value of Equity using ROE = Net Income / Book Value of Equity, giving Book Value of Equity = 4,00,000 / 0.20 = 20,00,000. Book Value per Share = 20,00,000 / 2,00,000 = Rs. 10. Finally, Market Price per Share = Book Value per Share × Price to Book Value = 10 × 5 = Rs. 50. Other options do not account for both book value and the price-to-book ratio accurately.

Test yourself for real

Take a full NISM Series XV mock test.

Same duration, same weighting, same difficulty distribution as the real exam — with explanations on every question.

NISM XV Mock Test 5