Underwriting of shares
This query is : Resolved
23 September 2016
M/s X and Y entered into an agreement with Y ltd. for 60% of the issue of 15% 50,00,000 debenture with firm underwriting of 500000. Marked applications were for 35,00,000 debentures. What is the liability of underwriters ?
23 September 2016
what is the face value of one debenture?
23 September 2016
Its not given. why face value is required we have to find the liability of securities. My doubt is marked application is more than gross liability but gave answer is 500000.
23 September 2016
Its not given. Why its required because we have to find total liability of securities. My doubt is marked applications is more than gross liability but answer is 500000. how it will be?
23 September 2016
Face value is very much required, because you are giving some figures with comma separators and the figure of 500000 is NOT comma separated. It is thus, not making clear whether the NON comma separated figure is quantity of debentures OR value of debentures
23 September 2016
Its not given. Why its required because we have to find total liability of securities. My doubt is marked applications is more than gross liability but answer is 500000.
23 September 2016
Its firm underwriting 5,00,000.
23 September 2016
There could be Abatement clause ....
the meaning of the words "firm underwriting 500000" is taken as IN ADDITION to marked application.....
(Let me try to explain.....as per the normal logic 60% of 50,00,000 is 30,00,000......marked applications received were 35,00,000....ok? ....so nothing as such remained out of this 60% underwriting.... ok?.....since there is NO any mention of abatement clause in the example.......it is taken as IN ADDITION to 60% .....is it ok?
the meaning of the words "firm underwriting 500000" is taken as IN ADDITION to marked application.....
(Let me try to explain.....as per the normal logic 60% of 50,00,000 is 30,00,000......marked applications received were 35,00,000....ok? ....so nothing as such remained out of this 60% underwriting.... ok?.....since there is NO any mention of abatement clause in the example.......it is taken as IN ADDITION to 60% .....is it ok?
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