"Why does mass increase with increase in speed?"
It doesn't. Special relativity expressly forbids discuss of mass in its formulation. "Relativistic mass" is an infinite number of different scalar values, depending on which direction you accelerate the mass.
"1.actually does this happen only for objects comparable to speed of light or for every object moving with any speed?"
It doesn't at all. Invariant mass = rest mass = inertial mass = gravitational mass =/= "relativistic mass"
"2.also why does this happen?"
Relativistic momentum changes with speed. It just has two terms that are speed dependent for a massive body, one of those being in gamma... 1 / sqrt( 1 - (v/c)^2)
"3. also is light mass less? i think it is, then what about this. E=mc^2"
We looked for mass, it has none. Having mass would also violate conservation of charge.
If you want to consider the correct formula, that talks about other than mass at rest:
E^2 = (pc)^2 + (mc^2)^2
... where p is relativistic momentum, a vector, and is non-zero for photons (aka light).
"what do you mean by "mass is invariant"? if so how can you explain the formation of a black hole?"
Black holes still have mass.
"this might be silly but isn't p the momentum which is the product of mass and velocity?"
That is in general not correct either.
http://hyperphysics.phy-astr.gsu.edu/hbase/relativ/relmom.html
[EDIT:
"I think a 1950s student..."
I suspect it was the person that asked the question. Initial disbelief. They did not ask the question out of disbelief, but to try and highlight what they thought were problems with relativity.
]
[EDIT: "So does this mean that the rest mass has nothing to do with speed?"
"rest" means "speed = 0 in the frame of rest".
"and also how come mass is relative?"
It is NOT, as already described.
"i know that speed and time can be relative coz of time dilation,length contraction etc,"
Be careful here. If I see you moving at 0.8c, you see me (and the rest of the Universe) moving by you at 0.8c. Also, we both agree on the speed of light, c. We only disagree on the speed of a third frame, and we can calculate what each other will measure.
"but i've never come across mass being relative?"
This concept is NOT taught in any current physics textbook. When they do, the teach you only the one formula, and do not teach you the correct formalism, namely:
http://www.physics.adelaide.edu.au/~dkoks/Faq/Relativity/SR/mass.html
... this is a tool that has more knobs than it should, and as I said before... consideration of any significant mass was intentionally left out of special relativity... so this formula / notion is both misguided, broken, and wrongheaded.
"does the word "relative" refer to different frames of time or is it like this rocket example?"
No it is just a mistake looking for a place to happen, and right now that is in your head. If I could reach out and slap the b*stard that thought up this idea (even if it were Einstein), and the grief and misunderstanding it has caused over the years, I think they woudl not even slap me back.
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[EDIT:
"... The very foundation of The Special Theory of Relativity is that: Length, Time, and Mass varies relative to the constant speed of light in a vacuum. ..."
Bold faced lie. Special Relativity discounts mass of any sort, and acceleration (but I repeat myself).
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