Question

Assertion (A): A share is a fractional part of the share capital and forms the basis of ownership interest in a company.

Reason (R): Shares refer to the units into which the total share capital of a company is divided.

Options

• Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

• Assertion (A) is true, but Reason (R) is false.

• Assertion (A) is false, but Reason (R) is true.

Answer 1

Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

Explanation:

Because purchasing a share makes a person a shareholder and hence the owner to the amount of the shares purchased, shares are the fractional component or unit of share capital providing the basis of corporate ownership.