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?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.
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