23 Lecture

1. What is share capital? a. The funds raised by a company through the sale of shares to investors b. The amount of money a company owes to its lenders c. The profits generated by a company from its operations d. The total assets owned by a company

Solution: a

2. What is authorized share capital? a. The maximum amount of share capital that a company is authorized to issue b. The amount of share capital that a company has already issued c. The amount of share capital that a company is required to issue d. The amount of share capital that a company has repurchased

Solution: a

3. What is issued share capital? a. The maximum amount of share capital that a company is authorized to issue b. The amount of share capital that a company has already issued c. The amount of share capital that a company is required to issue d. The amount of share capital that a company has repurchased

Solution: b

4. What is subscribed share capital? a. The maximum amount of share capital that a company is authorized to issue b. The amount of share capital that a company has already issued c. The amount of share capital that a company is required to issue d. The amount of share capital that a company has repurchased

Solution: b

5. What is paid-up share capital? a. The maximum amount of share capital that a company is authorized to issue b. The amount of share capital that a company has already issued c. The amount of share capital that a company is required to issue d. The amount of share capital that a company has repurchased and retired

Solution: d

6. Which of the following is not a type of share capital? a. Authorized share capital b. Issued share capital c. Paid-up share capital d. Retained earnings

Solution: d

7. What is the par value of a share? a. The value of a share as determined by the stock market b. The value of a share as stated on the share certificate c. The value of a share as determined by the company's board of directors d. The value of a share as determined by the company's auditors

Solution: b

8. What is the difference between common shares and preferred shares? a. Common shares have no voting rights, while preferred shares do b. Preferred shares have no voting rights, while common shares do c. Preferred shares have a higher claim on a company's assets and earnings than common shares d. Common shares have a higher claim on a company's assets and earnings than preferred shares

Solution: c

9. What is a stock split? a. The process of increasing the par value of a company's shares b. The process of reducing the par value of a company's shares c. The process of increasing the number of a company's shares outstanding d. The process of reducing the number of a company's shares outstanding

Solution: c

10. What is a rights issue? a. The process of issuing shares to the general public b. The process of issuing shares to a select group of investors c. The process of allowing existing shareholders to purchase additional shares at a discounted price d. The process of repurchasing shares from existing shareholders

Solution: c

1. What is share capital? Answer: Share capital refers to the funds raised by a company through the sale of shares to investors. It represents the ownership interest of shareholders in the company and is an important source of long-term financing.

2. What is authorized share capital? Answer: Authorized share capital is the maximum amount of share capital that a company is authorized to issue. This amount is specified in the company's articles of association.

3. What is issued share capital? Answer: Issued share capital is the amount of share capital that a company has already issued to its shareholders.

4. What is paid-up share capital? Answer: Paid-up share capital is the amount of share capital that shareholders have actually paid for. It represents the amount of capital that the company has received from its shareholders.

5. What is the difference between authorized share capital and issued share capital? Answer: Authorized share capital is the maximum amount of share capital that a company is authorized to issue, while issued share capital is the amount of share capital that the company has actually issued to its shareholders.

6. What is the par value of a share? Answer: The par value of a share is the value that is stated on the share certificate. It represents the minimum price at which the share can be issued or sold.

7. What is a stock split? Answer: A stock split is the process of increasing the number of a company's shares outstanding by dividing each existing share into multiple shares. This is usually done to make the shares more affordable and increase their liquidity.

8. What is a rights issue? Answer: A rights issue is the process of allowing existing shareholders to purchase additional shares in the company at a discounted price. This is usually done to raise additional capital for the company.

9. What is the difference between common shares and preferred shares? Answer: Common shares represent the ownership interest of shareholders in a company and typically come with voting rights. Preferred shares, on the other hand, usually do not come with voting rights but have a higher claim on the company's assets and earnings.

10. What is a share buyback? Answer: A share buyback is the process of a company repurchasing its own shares from the market. This is usually done to return capital to shareholders, boost earnings per share, or prevent hostile takeovers.

Share capital is an important source of funding for companies, and refers to the funds raised by a company through the sale of shares to investors. It represents the ownership interest of shareholders in the company and is an important component of the company's balance sheet. The share capital of a company can be divided into two categories - authorized share capital and issued share capital. Authorized share capital refers to the maximum amount of share capital that a company is authorized to issue, while issued share capital is the amount of share capital that the company has actually issued to its shareholders. The par value of a share is the value that is stated on the share certificate, and represents the minimum price at which the share can be issued or sold. Companies can issue shares with a par value or without a par value, known as no par value shares. In addition to the par value, shares can also have different classes, such as common shares and preferred shares. Common shares represent the ownership interest of shareholders in a company and typically come with voting rights. Preferred shares, on the other hand, usually do not come with voting rights but have a higher claim on the company's assets and earnings. Companies can also undertake various transactions related to share capital, such as a stock split, which involves increasing the number of a company's shares outstanding by dividing each existing share into multiple shares. This is usually done to make the shares more affordable and increase their liquidity. Another common transaction related to share capital is a rights issue, which involves allowing existing shareholders to purchase additional shares in the company at a discounted price. This is usually done to raise additional capital for the company. Companies can also repurchase their own shares from the market through a share buyback. This is usually done to return capital to shareholders, boost earnings per share, or prevent hostile takeovers. In conclusion, share capital is an important component of a company's balance sheet, and allows companies to raise capital from investors. Companies can issue different classes of shares, undertake various transactions related to share capital, and repurchase their own shares from the market through a share buyback.