Methods of Floatation

Q.

What are the methods of floatation in Primary Market?

Q.

When securities are allotted to institutional investors and some selected individuals, are referred to as _________.

1. Initial public offer

2. Offer through the prospectus

3. Private placement

4. Offer for sale

Q.

Which of the following is not a protective function of the stock exchange?

1. Controlling insider trading.

2. Promotion of fair practices and code of conduct in the securities market.

3. Regulation of takeover bids by companies.

4. Prohibition of fraudulent and unfair trade practices.

Q.

List some examples of the malpractices in capital market, which forced government to set-up a seperate regulatory body SEBI. State some of the regulatory functions of SEBI.

Q.

Stock exchanges provide an opportunity for investors to disinvest and invest. Identify the related function of the stock exchange.

Q.

The directors of a company have decided to expand their business activities by increasing the stock of raw materials and finished goods at an estimated cost of Rs. 50 lakhs, Describe the various ways open up the company to raise necessary finance for the purpose.

Q.

The director of a newly established company having paid up equity share capital of 25 crores desires to get its shares traded at all India Level Stock exchange. As finance manager of the company. Suggest the name of stock exchange for the purpose. Give any 3 reasons in support of your answer.

Q.

What is rights issue?

Q.

Meca Ltd., a reputed automobile manufacturer needs rupees ten crores as additional capital to expand its business. Atul Jain, the CEO of the company wanted to raise funds through equity. On the other hand, the Finance Manager, Nimi Sadheve said that the public issue may be expensive on account of various mandatory and non-mandatory expenses. Therefore, it was decided to allot the securities to institutional investors. Name the method through which the company decided to raise additional capital.

1. Offer through Prospectus

2. Offer for Sale

3. Private Placement

4. Rights Issue

Q.

What is the meaning of right issue?

1. Securities are not issued to existing shareholders at all

2. Company offers new shares to its existing shareholders

3. Company sells the securities to some selected institutions

4. None of these

Q.

Raising of funds to meet floatation cost of new issues is known as ___.

1. Price rigging

2. Bridge financing

3. Price fixing

4. None of the above

Q.

What is floatation of securities? Explain the different methods of floating new shares.

Q.

What is meant by primary market ? Explain any two methods of floating new issue in the primary market.

Q. State any five methods of floating new issues in the Primary Market?

Q. What are the methods of flotation in Primary Market?

Q.

Charu is a CA in Prakash Ltd. During the course of meeting with directors, she came to know that as against the previous years, this year the company is going to declare handsome dividend offer. It is observed that when such news becomes public then the share-market jumps up. Considering it, Charu purchased a large number of company's shares before this news reached the public. Identify the type of malpractice by Charu.

1. Price adulteration

2. Price factoring

3. None of the above

4. Price rigging

Q. Explain any four methods of flotation of new issue in the 'Primary Market'.

Q. What is meant by 'Primary Market'?

Q.

A share broker keeps complete knowledge about share market conditions. The directors of a company take his help to make a fresh issue of the proposed company. Later on, it was found that the share broker himself has brought a maximum number of shares of the company through unfair means with an objective of doing price rigging.

(i) Which market did the share broker work in and represented what possible institutions to make fresh issues for the company?

(ii) What are the unfair means undertaken by the share broker called? What does it mean?

(iii) Which regulatory body can protect investors and punish the share broker from this unfair means?

Q. What is the meaning of right issue?

1. Securities are not issued to existing shareholders at all
2. Company sells the securities to some selected institutions
3. Company offers new shares to its existing shareholders
4. None of these

Q. The Directors of a Company want to modernise its plants and machinery by making a public issue of shares. They wish to approach stock exchange. While the finance manager prefers to approach a consultant for the new public issue of shares. Advise the directors whether to approach stock exchange or consultant for the new public issue of shares and why? Also advise about the different methods which the company may adopt for the new public issue of shares.

Q. SUBJECT TESTING-I (Direct Questions)
Distinguish Between:
(2) Primary market and Secondary market.

Q.

What is the difference between stocks and equities?

Q. _______ may be defined as invitations to submit "bids to provide such goods/ services at quoted prices and subject to stated conditions".

1. Public Notice
2. Press Release
3. Tender Notices
4. Obituary Notice

Q. Which of the following is/are a method of flotation in the primary market?

1. Offer through prospectus
2. Offer for sale
3. Private placement
4. All of the above

Q. This is where a company gets listed in a stock exchange. Identify the platform _______________.

1. Standard Market
2. Primary Market
3. Money Market
4. Secondary Market

Q. When shares are issued to promoters not for their services, which account is debited?

1. Promotion Expenses A/c
2. Promoters A/c
3. Goodwill A/c
4. Preliminary Expenses A/c

Q.

Which of the following is a method of floatation?

1. All of these

2. Private Placement

3. Offer through prospectus

4. Offer for sale

Q. The fraudulent and unfair practices at a stock exchanges are commonly called as __________.

1. excessive speculation
2. manipulating share price
3. fraud
4. insider trading

Q. Many a time we see a term in newspapers 'IPO'. What is the full form of the same?

1. Indian Public Offer
2. Institutional Purchase Offer
3. Industrial Purchase Order
4. Initial Public Offer