New Enroll here to Join NaBFID Analyst Into Class on May 6

    Question

    This practice involves issuing shares at a value greater

    than their par value, thereby generating additional capital for the company above the original nominal amount. What is the term used to describe this scenario?
    A Forfeiture Correct Answer Incorrect Answer
    B Discount Correct Answer Incorrect Answer
    C Premium Correct Answer Incorrect Answer
    D Reserve Capital Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    When shares are reissued at a price higher than their face value, the excess amount over the face value is referred to as a premium. This is a common practice in the financial market when a company wants to raise additional capital and the shares are valued higher due to market demand or the company's strong financial position.

    Practice Next