Multiple choice

A company offers to the public 10,000 shares for subscription. The company receives application for 12,000 shares. If the shares are allotted on pro-rata basis, then applicants for 12,000 shares are to be allotted as

  1. 4 shares for every 5 shares applied.

  2. 2 shares for every 3 shares applied.

  3. 5 shares for every 6 shares applied.

  4. 3 shares for every 4 shares applied.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When applications (12,000) exceed shares available (10,000), pro-rata allotment = 10,000/12,000 = 5/6. This means applicants receive 5 shares for every 6 shares applied for. Ratio is allotment:application.

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