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 book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

A company issued 1000, 12% debentures of Rs. 100 at par redeemable at 10% premium. 12% stands for ______.

  1. rate of dividend

  2. rate of tax

  3. rate of interest

  4. rate of TDS
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The prefix (e.g., 12%) before the word 'debentures' always denotes the fixed rate of interest payable on the face value of the debentures.

Multiple choice

What is the minimum investment required to purchase REIT shares?

  1. $1,000
  2. $5,000
  3. $10,000
  4. $25,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The minimum investment required to purchase REIT shares varies, but it is typically around $1,000.

Multiple choice

What is the average dividend yield of REITs?

  1. 3%

  2. 5%

  3. 7%

  4. 9%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The average dividend yield of REITs is typically around 5%.

Multiple choice

What is the maximum share capital that a member can hold in a cooperative society?

  1. 10% of the total share capital

  2. 20% of the total share capital

  3. 30% of the total share capital

  4. 40% of the total share capital
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Cooperative Societies Act, 1912, limits the maximum share capital that a member can hold in a cooperative society to 20% of the total share capital.

Multiple choice

In supply chain management, the safety stock is the amount of inventory held in reserve to protect against unexpected increases in demand or disruptions in the supply chain. The safety stock is often calculated using the formula SS = z * sqrt(DS/H), where 'z' is the safety factor, 'D' is the annual demand, 'S' is the ordering cost, and 'H' is the holding cost. What does the term 'z * sqrt(DS/H)' represent in this formula?

  1. Total Inventory Cost

  2. Ordering Cost

  3. Holding Cost

  4. Safety Stock
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The term 'z * sqrt(DS/H)' in the formula SS = z * sqrt(DS/H) represents the safety stock, which is the amount of inventory held in reserve to protect against unexpected increases in demand or disruptions in the supply chain.

Multiple choice

What is the minimum share capital required to form a public company?

  1. ₹1 lakh

  2. ₹5 lakh

  3. ₹10 lakh

  4. ₹15 lakh
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

As per Section 48(1) of the Companies Act, 2013, the minimum share capital required to form a public company is ₹5 lakh.

Multiple choice

What is the minimum number of shareholders required to call an extraordinary general meeting?

  1. 10%

  2. 25%

  3. 50%

  4. 75%
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

As per Section 100(1) of the Companies Act, 2013, the minimum number of shareholders required to call an extraordinary general meeting is 10% of the total number of shareholders.

Multiple choice

What is the rate of capital gains tax applicable to the sale of shares of media and entertainment companies in India?

  1. 15%

  2. 20%

  3. 25%

  4. 30%
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The capital gains tax rate for the sale of shares of media and entertainment companies in India is 15%.

Multiple choice

What is the impact of a stock split on the value of a stock?

  1. The value of each share decreases

  2. The value of each share increases

  3. The value of each share remains the same

  4. The value of each share is unpredictable
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A stock split is a corporate action in which a company divides its existing shares into a larger number of shares. This results in a decrease in the value of each share.

Multiple choice

A stable dividend policy is one in which the:

  1. Dividend payout ratio is constant

  2. Dividend per share is constant

  3. Both of the above

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A stable dividend policy is one in which the dividend payout ratio is constant.

Multiple choice

A growth dividend policy is one in which the:

  1. Dividend payout ratio is increasing

  2. Dividend per share is increasing

  3. Both of the above

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A growth dividend policy is one in which the dividend per share is increasing.

Multiple choice

What is the formula for the debt-to-equity ratio of a company?

  1. Debt-to-Equity Ratio = Total Debt / Shareholders' Equity

  2. Debt-to-Equity Ratio = Shareholders' Equity / Total Debt

  3. Debt-to-Equity Ratio = Total Debt * Shareholders' Equity

  4. Debt-to-Equity Ratio = Shareholders' Equity * Total Debt
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The debt-to-equity ratio of a company is calculated by dividing the total debt by the shareholders' equity.

Multiple choice

Which of the following is a type of bond that allows the holder to convert it into a specified number of shares of the issuing company's stock?

  1. Callable bond

  2. Convertible bond

  3. Floating rate note

  4. Zero-coupon bond
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Convertible bonds are a type of hybrid security that allows the holder to convert the bond into a specified number of shares of the issuing company's stock at a predetermined price.

Multiple choice

What is the minimum paid-up share capital required to incorporate a public limited company in India?

  1. ₹1 lakh

  2. ₹5 lakh

  3. ₹10 lakh

  4. ₹15 lakh
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

As per the Indian Companies Act, the minimum paid-up share capital required to incorporate a public limited company in India is ₹5 lakh.

Multiple choice

What is the rate of stamp duty for a transfer of shares?

  1. 0.25%

  2. 0.5%

  3. 0.75%

  4. 1%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The rate of stamp duty for a transfer of shares is 0.5% of the consideration value.