A company declares 9% dividend on its shares of ₹100 available at ₹120. It means a person will receive annual dividend which is 9% of:

Dividend is always calculated on the face value (nominal value) of the shares.

Here, the face value of the share is ₹ 100.

∴ The person will receive an annual dividend which is 9% of the face value.

Hence, option 2 is the correct option.