NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Public Offering / Corporate Actions
Mr. Iyer holds 600 shares of a company in his demat account on the record date for a rights issue in the ratio of 2 new shares for every 5 held. Applying the ratio, how many rights shares is he entitled to subscribe to?
Mr. Iyer is entitled to 240 rights shares. A 2 for 5 ratio means 2 new shares for every 5 held, so 600 multiplied by 2 and divided by 5 gives 240. Inverting the ratio would wrongly give 1,500.
- A120
- B240Correct
- C300
- D1,500
Explanation
Entitlement = 600 x 2 / 5 = 240 shares. Option 120 divides by 10 wrongly, 300 uses half of holding, and 1,500 inverts the ratio (600 x 5 / 2).
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