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      Question

      If shares are issued by the companies to existing

      shareholders free of cost by capitalization of accumulated reserves from the profits earned in earlier years or share premium account are known as:
      A Rights Issue Correct Answer Incorrect Answer
      B Bonus Issue Correct Answer Incorrect Answer
      C Public Issue Correct Answer Incorrect Answer
      D Private Placement Correct Answer Incorrect Answer
      E FPO Correct Answer Incorrect Answer

      Solution

      If shares are issued by the companies to existing shareholders free of cost by capitalization of accumulated reserves from the profits earned in earlier years or share premium account are known as Bonus Shares. Shares issued of the companies by giving the option to existing shareholders to purchase at generally a price lower than the market price is known as Right Issue.┬а

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