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Standard XII

Business Studies

Functions of Financial Market

Sudha Lts. ha...

Question

Sudha Lts. has sold 1 lakh equity shares of Rs.10 each at Rs.12 per share to an investment banker, who offered them to the public at Rs.20 each. Identify the method of floatation.

Offer through Prospectus

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Offer for Sale

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Right Issue

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None of the above

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Solution

The correct option is B
Offer for Sale

Offer for sale: Unlike a follow-on public offering(FPO), where companies can raise funds by issuing fresh shares or promoters can sell their existing stakes, or both, the OFS mechanism is used only when existing shares are put on the block.

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Similar questions

Q. Sudha Ltd. has sold

1

lakh equity shares of Rs.

10

each at Rs.

12

per share to an investment banker, who offered them to the public at Rs.

20

each. Identify the method of flotation.

Q. X Ltd. offered 6,00,000 equity shares of 10 each Rs 8 called up. The public applied of 5,00,000 shares, all money was duly received except from Mr. X who holds 4,000 shares has not paid any thing after application money of Rs 2 per share and from Mr. Y who hods 1000 shares has paid only Rs 6 per share. X's shares were forfeited. The amount of subscribed capital to be disclosed in the Balance Sheet is _________.

10, 000

equity shares of Rs.

10

each were issued to public at a premium of Rs.

2

per share. Applications were received for

12, 000

shares. Amount of securities premium account will be ________.

Q. Pass necessary journal entries in the following cases :
(i)

Z

Ltd redeemed

1500

12 %

debentures of Rs

100

each issued at a discount of

6 %

by converting them into equity shares of Rs

100

each issued at a premium of Rs

25

per share.
(ii)

X

Ltd. converted

1, 000, 12 %

debentures of Rs

100

each issued at a discount of Rs

10

per debenture into equity shares of Rs

100

each Rs

90

paid up.

Q. X ltd provides the following information:

12% Preference Shares of Rs 10 each	6,00,000
General reserve	3,00,000
Profit and loss account	5,00,000
Securities Premium	70,000
Investments	4,50,000
Cash	1,00,000

The 12% preference shares are redeemable at a premium of 10%. The company wishes to maintain the cash balance at Rs 50,000. For the purpose of redemption of preference shares, It proposed to sell the investment for Rs 4,00,000. The company proposes to issue sufficient number of equity shares of Rs 100 each at a premium of 5% to raise required cash resources.
Number of equity shares to be issued is _____________.

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Sudha Lts. has sold 1 lakh equity shares of Rs.10 each at Rs.12 per share to an investment banker, who offered them to the public at Rs.20 each. Identify the method of floatation.

The correct option is B Offer for Sale Offer for sale: Unlike a follow-on public offering(FPO), where companies can raise funds by issuing fresh shares or promoters can sell their existing stakes, or both, the OFS mechanism is used only when existing shares are put on the block.

The correct option is B
Offer for Sale

Offer for sale: Unlike a follow-on public offering(FPO), where companies can raise funds by issuing fresh shares or promoters can sell their existing stakes, or both, the OFS mechanism is used only when existing shares are put on the block.