Underwriting of Shares and Debentures MCQ’s | Financial Accounting (Free Resource)

11. When the entire issue is underwritten by only one person, his liability will be equal to
(a) No. of shares underwritten
(b) No. of shares underwritten minus no. of shares applied for by the public
(c) No. of shares applied for by the public
(d) None of the above

12. Marked applications refers to
(a) Applications bearing the stamp of the underwriters
(b) Applications carrying the signatures of public who applied for shares
(c) Applications carrying the stamp of company which offered the shares
(d) None of the above

13. Unmarked applications refers to
(a) Applications bearing the stamp of the underwriters
(b) Applications from public received directly by the company without bearing any stamp of underwriters
(c) Applications issued by the company to underwriters
(d) None of the above

14. The underwriter is entitled to claim remuneration on
(a) the issue price of shares underwritten
(b) the face value of shares actually purchased
(c) the face value of shares not purchased by him
(d) None of the above

15. If the whole of the issue of shares or debentures is underwritten it is known as
(a) Partial underwriting
(b) Sole underwriting
(c) Complete or Full underwriting
(d) None of the above

16. If a part of the issue of shares or debentures is underwritten, it is termed as
(a) Partial underwriting
(b) Complete underwriting
(c) Firm underwriting
(d) None of the above

17. When an underwriter agrees to buy a definite number of shares in addition to unsubscribed shares, it is termed as
(a) Partial underwriting
(b) Firm underwriting
(c) Complete underwriting
(d) None of the above

18. According to the Companies Act, the commission payable to underwriter for underwriting shares should not exceed
(a) 5%
(b) 10%
(c) 2.5%
(d) 1.5%

19. Commission for underwriting shares as per the guidelines issued by the Stock Exchange division of the Dept. of Economic Affairs, Ministry of Finance (F 14/1/SE/85-7-5-85) and also as per SEBI guidelines should not exceed
(a) 5%
(b) 2.5%
(c) 10%
(d) 1.5%

20. The underwriting commission in the case of debentures as per Companies Act, should not exceed:
(a) 5% of the price at which debentures are issued
(b) 4% of the price at which debentures are issued
(c) 2½% of the price at which the debentures are issued
(d) None of the above

Answers: 11)No. of shares underwritten minus no. of shares applied for by the public 12)Applications bearing the stamp of the underwriters 13)Applications from public received directly by the company without bearing any stamp of underwriters 14)the issue price of shares underwritten 15)Complete or Full underwriting 16)Partial underwriting 17)Firm underwriting 18)5% 19)2.5% 20)2½% of the price at which the debentures are issued