Commerce Exam > Commerce Videos > #2 Issue of Shares At Par for Installment & Lump Sum in Easy way with Example by JOLLY Coaching
#2 Issue of Shares At Par for Installment & Lump Sum in Easy way with Example by JOLLY Coaching Video Lecture - Commerce
FAQs on #2 Issue of Shares At Par for Installment & Lump Sum in Easy way with Example by JOLLY Coaching Video Lecture - Commerce
| 1. What is the concept of issuing shares at par for installment and lump sum? |  |
Ans. Issuing shares at par for installment and lump sum refers to the process of offering shares to the public or existing shareholders at their face value or par value. It can be done either in installments or as a lump sum payment.
| 2. Can you provide an example of issuing shares at par for installment? | |
Ans. Sure! Let's say a company XYZ decides to issue 1,000 shares at a par value of $10 each. They allow the shareholders to pay for these shares in installments. So, the shareholders can pay, for example, $5 per share initially and the remaining $5 per share in the future as per the company's schedule. This is an example of issuing shares at par for installment.
| 3. How does issuing shares at par for lump sum work? | |
Ans. When shares are issued at par for lump sum, it means that the shareholders are required to pay the entire amount of the shares' par value upfront. For instance, if a company issues 1,000 shares at a par value of $10 each, the shareholders need to pay $10,000 in total at the time of subscription.
| 4. What are the advantages of issuing shares at par for installment? | |
Ans. Issuing shares at par for installment has several advantages. Firstly, it allows shareholders to pay for shares in smaller installments, making it more affordable for them. Secondly, it provides flexibility to shareholders as they can choose to pay in installments rather than paying the entire amount upfront. Lastly, it enables the company to attract a larger number of shareholders by offering the option of installment payments.
| 5. Are there any disadvantages associated with issuing shares at par for lump sum? | |
Ans. Yes, there can be disadvantages to issuing shares at par for lump sum. One major drawback is that it may restrict the participation of potential shareholders who may not have the financial capacity to pay the entire amount upfront. This can limit the company's ability to raise capital. Additionally, if the market value of the shares falls below the par value, shareholders may experience a loss on their investment.
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Nov 15, 2024 Last updated |
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