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

What is the minimum paid-up share capital required for 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 paid-up share capital for a public company is ₹5 lakh.

Multiple choice

What is the significance of earnings per share (EPS) in stock valuation?

  1. EPS represents a company's profit allocated to each outstanding share

  2. EPS is used to calculate the dividend payout ratio

  3. EPS is a key factor in determining a company's intrinsic value

  4. EPS is not relevant for companies that do not pay dividends
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Earnings per share (EPS) is a financial metric that measures a company's profit allocated to each outstanding share of common stock. It is calculated by dividing the company's net income by the number of outstanding shares.

Multiple choice

A company has a portfolio of stocks with a beta of 1.2. If the expected return on the market is 10%, what is the expected return on the company's portfolio?

  1. 12%

  2. 14%

  3. 16%

  4. 18%
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The expected return on a portfolio is equal to the risk-free rate plus the beta of the portfolio multiplied by the expected return on the market. In this case, the risk-free rate is assumed to be 2%, the beta of the portfolio is 1.2, and the expected return on the market is 10%. Therefore, the expected return on the company's portfolio is 2% + 1.2 * 10% = 12%. Therefore, the expected return on the company's portfolio is 12%.

Multiple choice

What is the rate of Stamp Duty on Share Certificates in India?

  1. 0.25%

  2. 0.50%

  3. 0.75%

  4. 1.00%
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The rate of Stamp Duty on Share Certificates in India is 0.25% of the face value of the shares.

Multiple choice

Who is responsible for paying the Stamp Duty on Share Certificates?

  1. The buyer of the shares.

  2. The seller of the shares.

  3. The company issuing the shares.

  4. The stockbroker facilitating the transaction.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The buyer of the shares is generally responsible for paying the Stamp Duty on Share Certificates.

Multiple choice

When is the Stamp Duty on Share Certificates payable?

  1. At the time of the transfer of shares.

  2. Within 15 days from the date of the transfer of shares.

  3. Within 30 days from the date of the transfer of shares.

  4. Within 60 days from the date of the transfer of shares.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Stamp Duty on Share Certificates is payable at the time of the transfer of shares.

Multiple choice

What are the consequences of not paying the Stamp Duty on Share Certificates?

  1. The transfer of shares may be declared void.

  2. The buyer of the shares may be liable to pay a penalty.

  3. The company issuing the shares may be liable to pay a penalty.

  4. All of the above.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Not paying the Stamp Duty on Share Certificates can result in the transfer of shares being declared void, the buyer of the shares being liable to pay a penalty, and the company issuing the shares being liable to pay a penalty.

Multiple choice

Are there any exemptions from the Stamp Duty on Share Certificates?

  1. Yes, for shares listed on a recognized stock exchange.

  2. Yes, for shares issued by a company to its employees.

  3. Yes, for shares issued by a company to its promoters.

  4. All of the above.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

There are exemptions from the Stamp Duty on Share Certificates for shares listed on a recognized stock exchange, shares issued by a company to its employees, and shares issued by a company to its promoters.

Multiple choice

How can the Stamp Duty on Share Certificates be paid?

  1. By affixing a stamp on the Share Certificate.

  2. By paying the Stamp Duty online.

  3. By paying the Stamp Duty through a bank.

  4. All of the above.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Stamp Duty on Share Certificates can be paid by affixing a stamp on the Share Certificate, by paying the Stamp Duty online, or by paying the Stamp Duty through a bank.

Multiple choice

What happens if a Stamp Duty stamp affixed on a Share Certificate is damaged or lost?

  1. The Share Certificate becomes invalid.

  2. The buyer of the shares may be liable to pay a penalty.

  3. The company issuing the shares may be liable to pay a penalty.

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

If a Stamp Duty stamp affixed on a Share Certificate is damaged or lost, it does not invalidate the Share Certificate and no penalties are applicable.

Multiple choice

Can the Stamp Duty on Share Certificates be refunded?

  1. Yes, in case of a mistake in the payment of Stamp Duty.

  2. Yes, in case of the cancellation of the transfer of shares.

  3. Yes, in case of the death of the holder of the shares.

  4. All of the above.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Stamp Duty on Share Certificates can be refunded in case of a mistake in the payment of Stamp Duty, in case of the cancellation of the transfer of shares, and in case of the death of the holder of the shares.

Multiple choice

What is the Stamp Duty rate applicable to the transfer of shares in a private limited company?

  1. 0.25%

  2. 0.50%

  3. 0.75%

  4. 1.00%
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Stamp Duty rate applicable to the transfer of shares in a private limited company is 0.25% of the face value of the shares.

Multiple choice

What is the Stamp Duty rate applicable to the transfer of shares in a public limited company?

  1. 0.25%

  2. 0.50%

  3. 0.75%

  4. 1.00%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Stamp Duty rate applicable to the transfer of shares in a public limited company is 0.50% of the face value of the shares.

Multiple choice

What is the minimum share capital required for a private limited company?

  1. Rs. 1 lakh

  2. Rs. 10 lakhs

  3. Rs. 25 lakhs

  4. Rs. 50 lakhs

  5. Rs. 1 crore
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The minimum share capital required for a private limited company is Rs. 1 lakh.

Multiple choice

In India, what is the current tax rate applicable to dividends received by individual shareholders?

  1. 10%

  2. 15%

  3. 20%

  4. 25%
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

As per the current tax laws in India, individual shareholders are subject to a dividend tax rate of 10%.