1. (A) Select the correct answer from the possible choices given below and rewrite the statements: [5]

(1) Normally _________ gives advice to the Board of directors in respect of financial matters.

(a) auditor     (b) secretary                     (c) finance manager

(2) A company must issue __________ shares.

(a) preference         (b) bonus      (c) equity

(3) Transfer of shares by operation of law is called ___________ of shares.

(a) transfer    (b) allotment            (c) transmission

(4) Fully convertible debentures are converted into __________ shares on maturity.

(a) equity      (b) deferred                 (c) bonus

(5) Dividend warrants are issued to ________ holders for getting dividend.

(a) Share certificate           (b) share warrant     (c) coupon

(B) Match the pairs [5]

Group AGroup B
a. Debenture holders 1. Approval of Secretary
b. Renewal of deposits2. Declared between two annual general meetings.
c. Interim dividend3. Creditors of the company
d. Letter of regret4. Primary market
e. Stock Exchange5. Owners of the company
6. Owners of the company
7. Declared in Extraordinary general meeting.
8. Share applicant becomes shareholder
9. Secondary market
10. Refund order

ANSWER : A – 3,B – 5, C – 2, D – 10, E – 9.

(C) Write a word or a term or a phrase which can substitute each of the following statements:

  1. The basic principle of business activities that aims at profit.

A. Profit maximization

  1. The value of share which is written on the share certificate and mentioned in the memorandum of association.

A. Face value.

  1. A document which is an invitation to the general public to subscribe for shares of company.

A. Prospectus .

  1. An acknowledgement of the deposit accepted by a company.

A. Deposit Receipt

  1. The institution which regulates business in stock exchange.

A. Securities Exchange Board of India (SEBI).

2. Distinguish between the following (any three)  15

  1. Fixed capital and Working Capital.
  1. Equity shares and Preference Shares.
  1. Share certificate and Share warrant.
  1. Dematerialization and Rematerialisation.
  1. Final dividend and Interim dividend.

3. Write Short Notes on (any three)  15

  1. Bonus shares
  2. Conditions of valid allotment.
  3. Renewal of deposits.
  4. Depository
  5. Provisions regarding unclaimed / unpaid dividend.

4. State, with reason, whether the following statements are True or False. (any three) 15

  1. Requirement of working capital does not depend upon any factor.

A. This statement is False.

  1. The bond holders are owners of the company.

A. This statement is False.

  1. Rights shares are issued to the general public.

A. This statement is False.

  1. Preference shareholders do not enjoy normal voting rights.

A. This statement is True.

  1. Stock exchanges reflect financial progress of the company.

A. This statement is True.

5. Attempt the following: (Any Two)   10

  1. Write a letter to a debenture holder informing him about conversion of debentures into equity shares.
  1. Draft a letter of thanks to a depositor of a company.
  1. State the characteristics of money market.
  1. Draft a letter to a depositor informing him about payment of interest.

6. Answer the following: (Any one) 10

  1. Define ‘preference shares’ . State various types of preference shares.
  1. Draft a letter for allotment to a share applicant.


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