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    Question

    Which of the following statements regarding IPO listing

    gains is correct?
    A If the opening share price after an IPO is higher than the allotment price, it results in a listing gain Correct Answer Incorrect Answer
    B Over-subscription in an IPO or FPO automatically leads to listing gains Correct Answer Incorrect Answer
    C Listing gains are recorded in the company’s Securities Premium account Correct Answer Incorrect Answer
    D Both A and C Correct Answer Incorrect Answer
    E All of the above Correct Answer Incorrect Answer

    Solution

    When shares are first traded on a stock exchange after an IPO, the price at which they open compared to the allotment price determines whether there is a listing gain or loss. If the opening price is higher than the allotment price, the difference is called a listing gain. • Statement A is true because this is the definition of listing gain. • Statement B is false since over-subscription does not guarantee listing gains; the actual outcome depends on demand, supply, pricing, and market sentiment. • Statement C is false because listing gains are market-driven and belong to investors, not recorded in the company’s financial accounts. Thus, only Statement A is correct.

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