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NISM Certifications · NISM-Series-XV: Research Analyst · Corporate Actions

A company announces a rights issue of 1 equity share for every 4 shares held at Rs 150 per share. An investor holds 2,000 shares. How many rights shares is the investor entitled to, and what total amount must be paid to subscribe fully?

The investor is entitled to 500 rights shares, since 2,000 shares divided by four gives 500. Subscribing fully at Rs 150 per share requires 500 multiplied by 150, which equals Rs 75,000.

  1. A500 shares; Rs 75,000Correct
  2. B400 shares; Rs 60,000
  3. C500 shares; Rs 3,00,000
  4. D8,000 shares; Rs 12,00,000

Explanation

Entitlement = 2,000 / 4 = 500 shares. Amount payable = 500 x Rs 150 = Rs 75,000. The 400-share option wrongly uses a 1:5 ratio, and Rs 3,00,000 wrongly applies the price to the 2,000 existing shares.

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