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a and b entered into a joint venture to underwrite share of K ltd. make an equity shares of 200000 equity shares 80% of shares are underwritten by the venture 160000 shares are subscribed by public.How many shares are subscribed by venturers??
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try to find out the concept of "Underwriting of shares " ..
math is jst simple...
Since out of 200000 shares which were issued by the company, only 160000 shares were underwritten by A and B, 40000 shares have been subscribed by other underwriters. It means A & B and other underwriters have subscribed in the ratio 160000 : 40000 or 4 : 1. Now public has subscribed to only 160000 shares, It means the company will allocate these applications to A&B and other subscribers in the ratio 4 : 1.
A & B share in 160000 shares (160000 x 4/5) = 128000 shares
A & B will have to subscribe to (160000 - 128000) = 32000 shares.
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