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Understanding Share Issuance

Authored by Dr. Asst.Prof-Commerce

Business

University

Understanding Share Issuance
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10 questions

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1.

MULTIPLE CHOICE QUESTION

10 sec • 2 pts

What is the primary purpose of issuing shares?

To raise capital for the company.

To reduce the number of outstanding shares.

To distribute profits among shareholders.

To increase the company's debt.

2.

MULTIPLE CHOICE QUESTION

10 sec • 2 pts

What are the different types of shares that can be issued?

Restricted shares

Debt shares

Equity shares, preference shares, ordinary shares, convertible shares

Bonus shares

3.

MULTIPLE CHOICE QUESTION

10 sec • 2 pts

How does issuing shares affect a company's capital structure?

Issuing shares decreases equity and increases debt reliance.

Issuing shares has no impact on the capital structure.

Issuing shares only affects the company's cash flow, not its capital structure.

Issuing shares increases equity and alters the capital structure by potentially reducing debt reliance.

4.

MULTIPLE CHOICE QUESTION

10 sec • 2 pts

What is the difference between equity shares and preference shares?

Preference shares are riskier than equity shares and have higher potential returns.

Equity shares are only available to institutional investors, while preference shares are available to the general public.

Equity shares have fixed dividends and no voting rights, while preference shares have voting rights and ownership.

Equity shares have voting rights and ownership, while preference shares have fixed dividends and priority in assets but no voting rights.

5.

MULTIPLE CHOICE QUESTION

10 sec • 2 pts

What are the advantages of issuing shares for a company?

Advantages of issuing shares include raising capital, reducing debt burden, enhancing company profile, and attracting investors.

Reducing market visibility

Limiting shareholder influence

Increasing operational costs

6.

MULTIPLE CHOICE QUESTION

10 sec • 2 pts

What is the process of issuing shares to the public called?

Private Placement

Share Buyback

Initial Public Offering (IPO)

Secondary Market Offering

7.

MULTIPLE CHOICE QUESTION

10 sec • 2 pts

How can a company determine the price at which to issue shares?

By analyzing financial health, market conditions, investor demand, and using valuation methods.

By consulting a fortune teller

By following competitor pricing

By randomly selecting a number

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