CUET Preparation Today
When shares of a company are issued at a premium, what does the premium represent? |
The excess amount above the face value received from share issuance The portion of shares issued for free to existing shareholders The cost associated with issuing new shares The amount the company earns as profit from the share issuance |
The excess amount above the face value received from share issuance |
When shares of a company are issued at a premium, it means that the issue price of the shares is higher than their nominal value or face value. The premium, in this context, refers to the additional amount that investors are willing to pay over and above the nominal value to acquire these shares. This premium is essentially the difference between the issue price and the nominal value of the shares. |
