Commerce Accountancy · Economics

Equity Shares and Capital

505 Questions

Equity shares and capital topics deal with corporate share issuance, forfeiture rules, dividend distributions, and yield calculations. Questions require an understanding of financial instruments like preference shares and call options. These concepts are essential for accountancy and commerce examinations.

Share valuationDividend yieldPreference sharesShare forfeitureCapital structure

Equity Shares and Capital Questions

Multiple choice general knowledge
  1. Earnings Per Share

  2. Computes the excess of market value of the firm over total historical investments

  3. Computes the return to shareowners that exceeds the minimum return on investment that shareowners require

  4. B and C

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Market Value Added (MVA) specifically measures the excess of the market value of a company over the capital invested in it. MVA = Market Value of Firm - Total Capital Invested, showing how much value management has created beyond what investors originally contributed. Option C describes Economic Value Added (EVA), which is different from MVA.

Multiple choice general knowledge
  1. most widely quoted financial measures of performance

  2. monetary unit return to the investor from holding the organization’s common stock

  3. All Answers are Correct

  4. = (Net income – preferred dividends) ? weighted average number of shares outstanding

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Earnings Per Share is indeed the most widely quoted financial performance measure, represents the monetary return to common shareholders, and is calculated as (Net Income - Preferred Dividends) divided by weighted average shares outstanding. Since all three statements are true, option C is correct. EPS is a fundamental metric that investors and analysts use universally to compare profitability across companies.

Multiple choice general knowledge
  1. Net income ? Common Equity

  2. Dividends per share / market price per share

  3. Earnings before Interest & Taxes / Sales

  4. Dividends per share / market price on toatal share

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Dividend Yield Ratio is specifically calculated as Dividends Per Share divided by Market Price Per Share, showing the percentage return an investor receives from dividends relative to the stock price. This ratio helps income-focused investors evaluate the cash return from their investment. Option A describes Return on Equity, Option C is Operating Margin, and Option D contains a typo ('toatal' instead of 'total').

Multiple choice general knowledge
  1. PE/EPS

  2. EPS/PE

  3. (EPS/PE)*100

  4. PE*EPS

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The PE ratio (Price-to-Earnings) is calculated as Price divided by EPS. Rearranging this formula gives Price = PE × EPS. This is the fundamental relationship between share price, PE ratio, and earnings per share.

Multiple choice general knowledge
  1. fact

  2. fiction

  3. almost fact:The IPO was in 2004, but shares went for $400.
  4. almost fact:It is actually in 2000.

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Google's IPO did occur in 2004, but the offering price was $85 per share, not $40. The stock opened at $100 on the first day of trading. Therefore, option B (fiction) is correct because the $40 figure is wrong. Option C's $400 claim is also incorrect.

Multiple choice general knowledge
  1. 100

  2. 30

  3. 500

  4. 50

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The BSE SENSEX (Bombay Stock Exchange Sensitive Index) consists of 30 financially sound and well-established companies representing key sectors of the Indian economy. These 30 stocks are carefully selected based on market capitalization, trading frequency, and industry representation. The S&P BSE 100 and BSE 500 are broader indices, while 50 is not used for the core SENSEX.

Multiple choice general knowledge
  1. True

  2. False

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Different exchanges establish their own lot sizes based on local market conventions and contract specifications. For example, NSE (India) and NYSE (USA) have different lot sizes for the same security due to varying market structures and regulatory requirements. Lot standardization varies across global exchanges.

Multiple choice general knowledge
  1. Equity per share

  2. Earnings Per Share

  3. Equity profits sum

  4. Earnings profits sum

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

EPS stands for Earnings Per Share. It's a key financial metric calculated by dividing a company's net income by the number of outstanding shares. It shows how much profit the company generates for each share of stock. The other options are not standard financial abbreviations.

Multiple choice general knowledge
  1. True

  2. False

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Stock split divides each existing share into multiple shares, reducing price per share proportionally while keeping total market capitalization unchanged. It does not create new equity or increase the company's capital base - only the number of outstanding shares changes.

Multiple choice general knowledge
  1. Earnings Per Share

  2. Earning Permanent Share

  3. Earnings Peak Share

  4. Earnings Past Share

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

EPS stands for Earnings Per Share, a key financial ratio showing company profit per outstanding share. Options B, C, and D use incorrect words like 'Permanent', 'Peak', and 'Past'.

Multiple choice general knowledge
  1. 65.5

  2. 65.8

  3. 65.3

  4. 65.2

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Approximately 66% of Tata Group's ownership is held by charitable trusts, with the precise figure being 65.8%. This unique structure ensures that the majority of profits from Tata companies fund philanthropic activities. The Tata Trusts (like Sir Dorabji Tata Trust and Sir Ratan Tata Trust) control this majority stake.

Multiple choice general knowledge sports
  1. True

  2. False

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The statement is asking whether Tata Group's shareholder count is less than 3.5 million. Since the correct answer is False, this means Tata Group has MORE than 3.5 million shareholders. This is reasonable given Tata's status as one of India's largest conglomerates with widespread public shareholding across multiple listed companies.

Multiple choice general knowledge
  1. Earnings Per Share

  2. Expenditure Per Share

  3. Equity Per Share

  4. Expenditure & Profit Share

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

EPS stands for Earnings Per Share, a key financial metric calculated as net income minus preferred dividends, divided by outstanding common shares. It measures profitability per share and is used in P/E ratios. Options B, C, and D are incorrect expansions.