Practice Test

Q1) A person who undertake to take up the whole or a portion of the offered shares or debentures as may not be subscribed for by the public is called - Show Answer

Q2) Underwriting is a contract of - Show Answer

Q3) As per the SEBI Regulations, the subscription list for public issues should be kept open for at least _____ and not more than as ________ disclosed in the prospectus. Show Answer

Q4) As per SEBI Regulations, the minimum subscription has been fixed at _____ of the issued amount. Show Answer

Q5) As per Section 39(2), the amount payable on applications is fixed by the directors but it cannot be less than _____ of the shares. Show Answer

Q6) As per the SEBI Regulations the minimum application money to be paid shall not be less than - Show Answer

Q7) Section 40(6) of the Companies Act, 2013 provides that a company pay _____ to any person in connection with issue of securities subj ect to prescribed conditions. Show Answer

Q8) Which of the following is essential condition for payment of underwriting commission? Show Answer

Q9) The underwriting commission may be paid out of: Show Answer

Q10) The underwriting commission may be paid out of: Show Answer

Q11) In the event of non receipt of minimum subscription all applications moneys received should be refunded within period stated below:
(a) Fornon-underwritten issues: Within of the closure of the issue.
(b) For underwritten issues: Within _____ of the closure of the issue.
Select the correct answer from the options given below.
Show Answer

Q12) In case of issue of shares, underwriting commission shall not exceed - Show Answer

Q13) In case of issue of debentures, underwriting commission shall not exceed - Show Answer

Q14) A definite commitment by the underwriter to take up a specified number of shares or debentures of a company irrespective of the number shares or debentures subscribed for by the public is known as - Show Answer

Q15) Unmarked application has to be distributed to underwriters in the ratio of - Show Answer

Q16) A broker - Show Answer

Q17) An underwriter - Show Answer

Q18) Who of the following generally acts as underwriter? Show Answer

Q19) As per SEBI Regulations, the merchant banker shall underwrite at least _____ itself or jointly with other merchant bankers associated with the issue. Show Answer

Q20) As per SEBI Regulations, the capital adequacy requirement for underwriter is net worth of _____ Show Answer

Q21) LPG Ltd. issued 32,000 shares which were underwritten as follows:
A: 19,200 shares, B: 8,000 shares & C: 4,800 shares.
The underwriters made applications for firm underwriting as -
A: 2,560 shares, B: 960 shares & C: 3,200 shares.
Details of marked application are -
A: 3,200 shares, B: 6,400 shares and C: 1,600 shares.
Unmarked applications are for 11,520 shares. Find out the net liability of individual underwriters.
Show Answer

Q22) NZ Ltd. issued 34,000 shares of Rs. 100 at a premium of Rs. 15 each. 90% of the issue was underwritten by M/s Broker & Co. Applications were received for 27,200 shares and allotment was fully made. Net liability of underwriter for shares = ? Show Answer

Q23) XM Ltd. issued 25,000 shares of Rs. 100 at a premium of Rs. 15 each. 90% of the issue was underwritten by M/s UWB & Co. at a maximum commission allowed under the Companies Act, 2013. Applications were received for 8,000 shares. Commission = ? Show Answer

Q24) LG Ltd. issued 10,000 shares of Rs. 100 at a premium of Rs. 15 each. 90% of the issue was underwritten by M/s X & Co. at a commission of 1% on the nominal value. Applications were received for 8,000 shares and allotment was fully made. All money was received in one installment. Net amount to be received from underwriter at the time of allotment of shares is - Show Answer

Q25) X Ltd. entered into an underwriting agreement with Y Ltd. for commission of 2.5% for 60% of the issue of Rs. 50,00,000, 15% Debenture with a firm underwriting of Rs. 5,00,000. Marked application were for Rs. 35,00,000 debenture. Net liability of underwriter = ? Show Answer

Q26) MM W Ltd. made an issue of 47,000,10% mortgage debentures of Rs. 100 each at par. The whole of the issue was underwritten by Y & Co. 39,950 debentures were applied for and allotted to the public. Net liability of underwriter to take number of debenture will be - Show Answer

Q27) BiggieLtd.madeanissueof 10,000,10% mortgage debentures of Rs. 100 each at Rs. 96. The whole of the issue was underwritten by Smart Bulls. 8,500 debentures were applied for and allotted to the public. The underwriters discharged their liability and were paid commission at the rate of 2% on the nominal value of the debentures. Which of the following statement is correct? Show Answer

Q28) Abrol Ltd. offered to the public 5,000, 9% mortgage debentures of Rs. 100 each at Rs. 105 and 80% of the issue was underwritten by Smart Bulls for commission @ 2.5%. Applications were received from public for 4,000 debentures which were allotted. Balance Sheet will tally at - Show Answer

Q29) Sun Ltd. issued 1,00,000 equity shares. Whole of the issue was underwritten as follows:
M: 35%; L: 25%; T: 30%; P: 10%
Applications for 80,000 shares were received in all; out of which applications for 20,000 shares had the stamp of M; 15,000 that of L; 22,000 that of T and 8,000 of P. Remaining 15,000 applications did not bear any stamp. Determine the liability of each underwriter.
Show Answer

Q30) __________ means the option given to the whole-time directors, officers or employees of a company, which gives such directors, officers or employees the benefit or right to purchase or subscribe at a future date, the securities offered by the company at a pre-determined price. Show Answer

Q31) Which of the following section of the Companies Act, 2013 allows a company to offer shares to employees under a scheme of employee’s stock option? Show Answer

Q32) As per Section 62(2) of the Companies Act, 2013, a company can offer shares to employees under a scheme of employees stock option by passing - Show Answer

Q33) A listed company can offer various benefits to employees such as ESOS or ESPS by complying provisions of the -
(1) Companies Act, 2013
(2) SEBI (Share Based Employee Bene¬fits) Regulations, 2014
(3) Companies (Share Capital & Deben¬tures) Rules, 2014
Select the correct answer from the options given below.
Show Answer

Q34) Which of the following persons is covered under the provisions relating to share based payment regulation made by the SEBI? Show Answer

Q35) As per Rule 12 of the Companies (Share Capital & Debentures) Rules, 2014, 'employee' includes -
(I) A permanent employee of the com¬pany who has been working outside India
(II) Independent director
(III) An employee who is a promoter
(IV) Whole time director
(V) Director who holds more than 10% of the outstanding equity shares of the start-up company
Select the correct answer from the options given below.
Show Answer

Q36) Which of the following person can be treated as 'employee' and hence eligible for employees share based payment benefits? Show Answer

Q37) SEBI (Share Based Employee Benefits) Regulations, 2014 applies to:
(1) Employee Stock Option Schemes
(2) Employee Stock Purchase Schemes
(3) Stock Appreciation Rights Schemes
(4) General Employee Benefits Schemes
(5) Retirement Benefit Schemes
Select the correct answer from the options given below.
Show Answer

Q38) Under the _____, employees are given an option to purchase shares on the spot at a discount price. Show Answer

Q39) Under ESPS employees are given an option to purchase shares on the spot at a - Show Answer

Q40) Under ESOS employees are given an option to purchase shares at: Show Answer

Q41) Shares to be issued under ESOS - Show Answer

Q42) __________ means the price, if any, pay¬ able by the employee for exercising the option or SAR granted to him. Show Answer

Q43) __________ means the process by which the company issues options, SARs, shares, or any other benefits under any of the schemes. Show Answer

Q44) A company may implement share based employees benefit schemes: Show Answer

Q45) Which of the following statement is true? Show Answer

Q46) There shall be a minimum vesting period of _____ in case of ESOS. Show Answer

Q47) Shares issued under an ESPS shall be locked-in for a minimum period of _____ from the date of allotment. Show Answer

Q48) Where the right to obtain Shares or Stock Options expires unexercised, the balance standing to the credit of Employee Stock Option Outstanding A/c should be transferred to: Show Answer

Q49) Employees Stock Option Outstanding A/c is transitional in nature and is ultimately transferred to: Show Answer

Q50) __________ is the excess of the market price of the share under ESOS over the exercise price of the option Show Answer

Q51) On 1.4.2019, a company offered 300 shares to each of its 1,200 employees at Rs. 75 per share. The employees are given a month to accept the shares. The shares issued under the plan shall be subject to lock-in to transfer for 3 years from the grant date i.e. 30.4.2019. Market price of shares on the grant date is Rs. 90 per share. Due to post-vesting restrictions, fair value of shares issued under the plan is estimated at Rs. 84 per share. Up to 30.4.2019, 50% of employees accepted the offer and paid Rs. 75 per share. Face value of share is Rs. 10.
Expenses to be recognized in year 2019- 2020 = ?
Show Answer

Q52) X Ltd. has its share capital divided into equity shares of Rs. 10 each. On 1.1.2020 it granted 20,000 employees stock option at Rs. 50 per share, when the market price was Rs. 120 per share. The options were to be exercised between 15.3.2020 & 31.3.2020. The employees exercised their options for 16,000 shares only and the remaining options lapsed. The company closes its books on 31st March every year. Which of the following is correct? Show Answer

Q53) A company has its share capital divided into shares of Rs. 10 each. On 1.1.2016, it granted 5,000 employees stock option at Rs. 50, when the market price was Rs. 140. The options were to be exercised between 1.3.2017 to 31.3.2017. The employees exercised their options for 4,800 shares only; remaining options lapsed. How much amount will be transferred from Employees Compensation Expenses A/c to Profit & Loss A/c? Show Answer

Q54) On 1.4.2019, GP Ltd. offered 100 shares to each of its 500 employees at Rs. 50 per share. Employees are given a year to accept the offer. Shares issued under the plan shall be subject to lock-in on transfer for 3 years from the grant date. Market price of shares on the grant date is Rs. 60 per share. Due to post-vesting restrictions on transfer, the fair value of shares issued under the plan is estimated at Rs. 56 per share. On 31.3.2020, 400 employees accepted the offer and paid Rs. 50 per share, (a) Expenses to be recognized = ? & (b) Securities Premium A/c will be credited by = ? Show Answer

Q55) A company has its share capital divided into shares of Rs. 10 each. On 1.4.2018, it granted 5,000 shares as employee’s stock options at Rs. 40 per share, when the market price was Rs. 130 per share. The options were to be exercised between 16.12.2018 and 15.3.2019. The employees exercised their options for 4,500 shares only; the remaining options lapsed. Which of the following is correct? Show Answer

Q56) On 1.1.2016, Tulip Ltd. offered 100 shares of Rs. 10 each to each of its 500 employees at Rs. 30 per share. The employees were given time up to 31.3.2016 to accept the offer. The shares issued under ESOP shall be subject to lock-in-period of 2 years from the grant date. Other details provided are as under;
(i) Market price of shares on the grant date is Rs. 50 per share.
(ii) Fair market value of shares is esti¬mated at Rs. 40 per share.
(iii) On 31.3.2016,400 employees accept¬ed offer and paid Rs. 30 per share.
Employees Compensation Expenses A/c will be debited by -
Show Answer

Q57) S Ltd. grants 1,000 options to its employees on 1.4.2010 at Rs. 60. The vesting period is 2.5 years. The maximum exercise period is 1 year. Market price on that date is Rs. 90. All the options were exercised on
31.7.2014. F face value of equity share is Rs. 10 per share. Expenses to be recognized in year 2010-2011,2011 -2012 & 2012-2013 = ?
Show Answer

Q58) Reliance Ltd. grants 1,000 employees stock options on 1.4.2012 at Rs. 40, when market price is Rs. 160. The vesting period is 2.5 years and maximum exercise period is 1 year. 300 unvested options lapse on 31.3.2014. 600 options are exercised on 30.6.2015. 100 vested options lapse at the end of the exercise period. Expenses to be recognized in years 2012-2013, 2013-2014 & 2014-2015 = ? Show Answer

Q59) Take the data of above question and state how much amount will be transferred to General Reserve A/c for 300 unvested options lapsed on 31.3.2014? Show Answer

Q60) The total managerial remuneration payable by a company, to its directors, including managing director and whole-time director, and its manager in respect of any financial year shall not exceed 11% of the net profits of that company for that financial year computed in the manner laid down in Sec. 198 except that the remuneration of the directors shall not be deducted from the gross profits. This restriction is not applicable in case of: Show Answer

Q61) The underwriting commission on shares must not exceed: Show Answer

Q62) The underwriting commission on Debenture must not exceed: Show Answer

Q63) Can a Private Limited Company issue debenture as per Companies Act, 2013? Show Answer

Q64) M/s XYZ Ltd., is a public limited company desires to issue debenture with voting rights, Can company do so? Show Answer

Q65) What is the cooling period after the buyback of securities for the same type of securities Show Answer

Q66) Sources of funds for buy back of shares are Show Answer

Q67) Which of the following companies shall not buy back its own securities unless the consequent reduction of share capital is effected under the Section 67 of the Companies Act, 2013? Show Answer

Q68) Every buyback shall be completed within Years from the date of passing of special resolution/Board resolution. Show Answer

Q69) M/s ABC Limited desires to buy back its shares. Company passed the special resolution at 1st January, 2016. As per Section 68 (4) of the companies Act, 2013, up to which date company need to be completed the process of buy back? Show Answer

Q70) A company want to redeem 12000 shares whose face value is 10 each at a redemption value of Rs. 15 each. The company wants to redeem shares out of profits. Amount required to be transferred to CRR is- Show Answer

Q71) Underwriting commission is paid out of ............. Show Answer

Q72) Copy of underwriter agreement should be delivered to ............. Show Answer

Q73) For issuing employees stock option is required to be passed by company. Show Answer

Q74) Letter of Buy Back offer shall be as per format prescribed in ............. . Show Answer

Q75) Which of the following statements is not true? Show Answer

Q76) In the event of liquidation of the company the debenture holders have prior right for Show Answer

Q77) Discount on issue of debenture is a Show Answer

Q78) Discount on issue of debenture is shown in balance sheet as Show Answer

Q79) Premium on redemption of debenture A/c is a Show Answer

Q80) Premium on redemption of debenture is generally provided at the time of ............. Show Answer

Q81) Debentures cannot be redeemed at Show Answer

Q82) Debentures can be redeemed out of Show Answer

Q83) A company issued 1000 12% debentures of 100 at par redeemable at 10% premium. 12% stands for Show Answer

Q84) Debenture holders are ............. Show Answer

Q85) Which of the following is incorrect with respect of debentures? Show Answer

Q86) Which of the following is incorrect? Show Answer

Q87) Debentures which are not secured by any charge upon any assets of the company are called Show Answer

Q88) A company issued 14% debentures of Rs. 1,000 each at Rs. 950 to be redeemable at Rs. 1,050. The difference of Rs. 100 will be Show Answer

Q89) The maximum discount at which debenture can be issued is Show Answer

Q90) Loss on issue of debenture A/c is a Show Answer

Q91) XYZ Ltd. issued 1,00,000 debentures of Rs. 100 each at a discount of 10% to be redeemed at the end of 10t h year from the date of issue at par. The loss on issue of debenture will be written off as Show Answer

Q92) ABC issued 1,00,000 12.5% debentures of Rs. 100 each. The total amount of interest payable on the debentures will be Show Answer

Q93) Which of these statement is not true about debenture holders - Show Answer

Q94) Which of the following is odd one Show Answer

Q95) ............. debentures are those which can be transferred by mere delivery. Show Answer

Q96) Issue of debentures as collateral securities means issue of such debentures as -. Show Answer

Q97) Which of these is not a method of redemption of debentures? Show Answer

Q98) Debentures which are convertible into shares at the option of the shareholders according to the terms of the issue are known as - Show Answer

Q99) As per SEBI Guidelines Debenture Redemption reserve is required to be created in case the company issue debentures with a maturity of - Show Answer

Q100) Company should created DRR equivalent to ........% of the amount of debenture issue before redemption of debenture can commence. Show Answer

Q101) Withdrawal from DRR is permissible only after .......% of the debenture liability has been redeemed. Show Answer

Q102) Debenture holders are: Show Answer

Q103) Zero Coupon Bonds are issued: Show Answer

Q104) Interest payable on debentures is: Show Answer

Q105) A debenture holder is entitled to: Show Answer

Q106) Which of the following statements is false? Show Answer

Q107) Which of the following is not a characteristic of Bearer Debentures? Show Answer

Q108) Which of the following statements is false? Show Answer

Q109) Which of the following statements is false: Show Answer

Q110) Discount on the issue of Debentures should be shown on the: Show Answer

Q111) Debentures of a Company can be issued: Show Answer

Q112) On issue of debentures as a collateral security, which account is credited? Show Answer

Q113) Interest on debentures issued as a collateral security is paid on: Show Answer

Q114) Loss on Issue of Debentures is written off: Show Answer

Q115) When debentures are to be redeemed at premium an extra entry has to be made at the time of issue of debentures, which a/c should be credited in this entry? Show Answer

Q116) Premium on Redemption of Debentures Account is: Show Answer

Q117) On 1st April 2017, Sunrise Limited issued 5,000, 8% debentures of Rs. 100 each at a discount of 5%. What will be the total amount of interest for the year ending 31st March 2018? Show Answer

Q118) As per SEBI Guidelines an amount equal to ............. of the debenture issue must be transferred to Debenture Redemption Reserve before redemption begins. Show Answer

Q119) According to the guidelines issued by Securities and Exchange Board of India (SEBI) what percentage of the amount of debentures must be transferred to 'Debentures Redemption Reserve' before the commencement of redemption of debentures, in case of convertible debentures? Show Answer

Q120) X Ltd., wants to redeem 5,000, 5% Debentures of Rs. 100 each at 5% premium. How much amount it must transfer to Debenture Redemption Reserve, if it has already a balance of Rs. 1,00,000 in Debenture Redemption Reserve Account? Show Answer

Q121) Where is 'Debenture Redemption Reserve' transferred after the redemption of all debentures? Show Answer

Q122) Debentures can be redeemed: Show Answer

Q123) Debentures can be redeemed: Show Answer

Q124) In case of buy-back of shares, passing of the special resolution is not required if: Show Answer

Q125) Every buy-back shall be completed within a period of ____ from the date of the resolution or special resolution, as the case may be, passed by the Board. Show Answer

Q126) The Escrow account under Regulation 9(xi) of SEBI (Buy back of securities) Regulations, 2018 does not include: Show Answer

Q127) Unmarked application has to be distributed to underwriters in the ratio of _______ Show Answer

Q128) Applications bearing the stamp of the respective underwriter are called as _____ Show Answer

Q129) Underwriting is a contract of: Show Answer

Q130) As per Section 68 of the Companies Act, 2013, post buyback, debt equity ratio should not exceed _______ Show Answer

Q131) Where a company buys back own shares or other specified securities, it shall extinguish and physically destroy the shares or securities so brought back within ______ of the last date of completion of buy-back? Show Answer

Q132) Declaration of solvency in relation to buy back of shares has to be filed in _____ Show Answer

Q133) Paid-up- equity shares capital of Novel Ltd. is Rs 50,00,000 having face value of Rs 10 each fully paid-up. Other details:
General Reserve = Rs 15,00,000
Capital Redemption Reserve = Rs 4,00,000
Profit & Loss Account = Rs 1,00,000
Statutory Reserve = Rs 6,40,000
Securities Premium = Rs 1,00,000
The board of directors passed resolution in board meeting to buy back maximum number of shares as allowed by law. What is the maximum no. of shares that can be bought back? Show Answer

Q134) Negi Ltd. had 90,000 equity shares of Rs 100 each, fully paid up. The company decided to buy back 10% shares at par by the issue of sufficient number of preference shares. Company do not have any reserves. How much preference shares are required to be issued, if new preference shares are to be issued at Rs 10 each? Show Answer

Q135) The escrow amount shall be payable in the following
manner:
(i) if the consideration payable does not exceed 100 crores; 25 per cent of the consideration payable
(ii) if the consideration payable exceeds 100 crores; 25 per cent up to 100 crores and 10 per cent thereafter with
(iii) if the consideration payable does not exceed 10 crores; 25 per cent of the consideration payable
(iv) if the consideration payable exceeds 100 crores; 5 per cent up to 100 crores and 2.5 per cent thereafter Show Answer

Q136) The Escrow account under Regulation 9(xi) of SEBI (Buy-Back of Securities) Regulations, 2018, does not include: Show Answer

Q137) Which of the following statements is not true? Show Answer

Q138) Premium on Redemption of debentures Account is: Show Answer

Q139) Where is 'Debenture Redemption Reserve' transferred after the redemption of all debentures? Show Answer