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प्रश्न
Distinguish between the following.
Fixed Price Issues and Book Building
उत्तर
| Fixed Price Issue Method |
Book Building Method |
|
1. Meaning: Under this method, the issue price of shares is mentioned in the prospectus and investors have to buy shares at that price only. |
Under this method, the issue price is determined by a bidding process. The investors are given a price band and are asked to bid at a price within the band. This way company arrives at a price at which it will sell its shares. |
|
2. Price of Shares: The exact price of shares is known in advance and it is mentioned in the prospectus. |
The price of shares is not known in advance. Only the minimum price and maximum price at which the company is willing to sell the shares are known in advance. |
|
3. Prospectus: The company has to issue a prospectus and it contains the details of the price at which shares are offered and the total number of shares offered by the company. |
Company issues a Red Herring Prospectus. It contains only the price band and the total size of the issue. |
|
4. Determination of Demand: The company comes to know the public demand for its shares only after the closure of the issue. |
The company can know the public demand for its shares every day. The bids are registered in the book every day until the closure of the issue. |
|
5. Payment of Application Money: Application money or the entire money has to be paid by the investor at the time of submitting his application for shares. |
Only application money has to be paid at the time of bidding. The money will be collected only after the issue price has been fixed. |
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6. When Used: It can be used for any issue i.e. Public Issues, Rights Issues, ESOS, etc. |
It is usually used in Public issues i.e. IPO and FPO. |
संबंधित प्रश्न
In ________, shares of a company are offered to the public for the first time.
Select the correct answer from the options given below and rewrite the statement.
Bonus shares are issued free of cost to ______
Write a word or a term or a phrase which can substitute the following statement.
Offering of shares by a company to the public for the first time.
Write a word or term or phrase which can substitute the following statement.
It is also called ‘Capitalisation of Profits’.
State whether the following statement is true or false.
Sweat Equity shares are offered to Directors or employees of a company.
Correct the underlined word and rewrite the following sentence.
Company enters into an underwriting agreement with the shareholders.
Explain the following term/concept.
Employees Stock Option Scheme
Explain the following term/concept.
Subscribed capital
Explain the following term/concept.
Minimum subscription
Explain the following term/concept.
Private placement
Initial Public Offer and Further Public Offer
Answer in brief.
State the provisions related to Bonus Shares.
Answer the following question.
Explain the two methods a company can use to make its public offer of shares.
Match the pairs.
| Group A | Group B |
| a) Bond holders | 1) Deals with acquisition and use of assets |
| b) IPO | 2) Declared in Annual General Meeting |
| c) Corporate finance | 3) Any issue after first-time public offer |
| d) Final dividend | 4) Deals with acquisition and use of capital |
| e) Preference shares | 5) First-time public offer |
| 6) Fixed rate of dividend | |
| 7) Owners | |
| 8) Fluctuating rate of dividend | |
| 9) Creditors | |
| 10) Declared in board meeting |
Give one word or phrase for the following sentence:
Process of offering shares of the company to the public for the first time.
What is Employee Stock Purchase scheme?
Give one word or phrase for the following sentence:
Full form of SARS.
Explain the following term/concept:
Bonus shares
