Unit study guide · NISM Series II-B
Characteristic of Equities
7 questions in this unit
What this unit covers
- Which right is normally associated with an ordinary equity shareholder?
- A share has face value ₹10 and a declared 20% dividend. What is its dividend per share?
- A new share has ₹10 face value and sells for ₹75. What is the share premium?
- What is the main purpose of a rights issue offered to existing shareholders?
- Which characteristic generally distinguishes preference shares from ordinary equity?
- Which term refers to the maximum share capital a company's constitutional documents permit?
- A company buys back part of its outstanding equity. What happens to the number of outstanding shares, assuming cancellation?
Key ideas
From the practice bank · 1
Which right is normally associated with an ordinary equity shareholder?
Ordinary equity typically carries voting rights on matters requiring shareholder approval.
Hint Think about participation in company decisions.
II-B-006From the practice bank · 2
A share has face value ₹10 and a declared 20% dividend. What is its dividend per share?
Dividend per share equals ₹10 × 20% = ₹2.
Hint Use the face value when interpreting the stated dividend percentage.
II-B-007From the practice bank · 3
A new share has ₹10 face value and sells for ₹75. What is the share premium?
Share premium equals the issue price ₹75 less face value ₹10, giving ₹65.
Hint Separate nominal capital from the amount paid above it.
II-B-008From the practice bank · 4
What is the main purpose of a rights issue offered to existing shareholders?
A rights issue lets eligible existing owners subscribe to additional shares before dilution.
Hint Think about dilution when new shares are issued.
II-B-009From the practice bank · 5
Which characteristic generally distinguishes preference shares from ordinary equity?
Preference shares generally have priority over ordinary equity for specified payouts or repayment.
Hint Recall the order of claims within share capital.
II-B-010From the practice bank · 6
Which term refers to the maximum share capital a company's constitutional documents permit?
Authorised capital represents the company's permitted share-capital limit.
Hint Think about the legal ceiling, not money already received.
II-B-011From the practice bank · 7
A company buys back part of its outstanding equity. What happens to the number of outstanding shares, assuming cancellation?
Cancelling repurchased shares reduces the outstanding share count.
Hint Track shares that remain with investors after cancellation.
II-B-012