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Consider the following statements:
Assertion (A): Rights shares are given to equity shareholders in proportion to their share capital in the company.
Reason (R): Equity shareholders assume the greatest risk in company finance.
Now select your answer:

Consider the following statements:
Assertion (A): Rights shares are given to equity shareholders in proportion to their share capital in the company.
Reason (R): Equity shareholders assume the greatest risk in company finance.
Now select your answer: Correct Answer Both A and R are true, and R is the correct explanation of A

Related Questions

In the question below, a passage is given followed by three courses of actions numbered I, II and III. On the basis of the information given, you have to assume everything in the statement to be true, and then decide which of the following suggested courses of actions logically follow(s) for pursuing. Passage: The board of Vedanta Ltd Limited on Monday approved a proposal for delisting of the company and will seek shareholders approval for the process through e-Voting, the company informed the exchanges. The company has proposed to buy 48.9% shares at Rs 87.5 apiece whereas the book value of the company is around Rs. 141 per share. Retail investors hold 7% of the total shares whereas Institutional Investors hold 41.9% of the total shares. Minimum 90% of shareholders should approve the de-listing for it to happen. The scrip closed today at Rs.110, down 4% from the previous close. Courses of action: I. Vedanta must cajole Institutional shareholders to approve the de-listing. II. Institutional Investors must seek a better deal from the company and vote out this proposal as it is below both the market price and book value. III. Retail investors must come together and complain to the exchanges regarding the company’s attempt to force them out of their shares.
Which of the following distinction(s) is/are not correct between public issue and rights issue? (A) In public issue, applications for shares are invited from the general public and in rights issue, the shares are offered to existing shareholders. (B) In public issue there is no question of any over-subscription and in rights issue the shares may be under subscribed or over subscribed leading to prorata allotment. (C) The price of public issue is generally less than the market price and in rights issue, the price is deliberately made less than the market price. (D) In a public issue, the communication of the issue is through prospectus or advertisements and in a rights issue the communication is between the company and the existing members of the company. Choose the most appropriate answer from the options given below:
Match List I with List II: List I (Method) List II (Purchase consideration) (A) Lump-sum payment method (I) Calculated by adding up the total amount (money value) of existing shares, preference shares and cash received from the purchasing company for the shareholders of the vendor company. (B) Net Assets Method (II) On the basis of ratio in which the shares of the transferee company are to be exchanged for the shares of the transferor company. (C) Net Payment Method (III) The amount to be paid by the transferee company to transferor company for amalgamation of its business. (D) Swap Ratio Method (IV) Arrived at by adding the agreed value of assets taken over and deducting there from the agreed values of liabilities. Choose the correct answer from the options given below:
Match List I with List II: List I List II (A) Bonus shares (I) Invitation to existing shareholders to purchase additional new shares (B) Demat shares (II) Issue is made to existing members free of charge (C) Right issue (III) Share issues by a company to its employees/directors at a discount for providing know-how (D) Sweat equity share (IV) Shares in electronic form Choose the correct answer from the options given below:
5 shareholders of a company have 1290, 2302, 9802, 3202, 7480 shares of the company, respectively. If the company announces a bonus of 2 shares for every 4 shares held, what will be the new average of the shares held by these shareholders?
A company issued 1,00,000 equity shares of the face value of Rs. 100 each at Rs. 100 per share. So far Rs. 75 per share has been called up including Rs. 25 on allotment and Rs. 25 on first call. X to whom 200 shares were issued failed to pay the first call. His shares were forfeited and re-issued to Y at Rs. 70 per share as fully paid-up. The amount to be transferred to Capital Reserve a/c would be:
A company issued 50,000 Equity shares of Rs. 10 each, Rs. 8 paid up and 50,000 8% Preference shares of Rs. 100 each. Expected profits are Rs. 10,00,000 Normal rate of dividend on Equity shares is 16%, Provision for taxation 60% and 10% of the profit is transferred to reserves.
The value of equity share will be:
In order to raise finance, which of the following securities can be issued by a company?
1. Equity Shares
2. Redeemable Equity Shares
3. Redeemable Debentures
4. Redeemable Preference Shares
5. Bonus Shares
Select the correct answer:
The face value of a company share is Rs. 1000 per share. The company issued it at Rs. 150 per share. Mareket price of these shares is Rs. 200 per share at present. company declaired 20% dividend on these share. The amount of dividend per share will be
For amalgamation in the nature of merger, the shareholders holding atleast . . . . . . . . or more of the equity shares of the transferor company becomes the equity shareholders of transferee company.