Question

Differentiate between over subscription and under- subscription.​

Answer 1

Explanation:

Oversubscription means no. of shares applied is more than the shares offered for subscription. Undersubscription means no. of shares applied is less than the shares offered for subscription.

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Answer 2

Answer:

Over Subscription:

1. Applications received are more than the shares issued

2. In this case the application money is refunded on the rejected applications

3. Pro-rata allotment is made in this case

4. Minimum subscription is automatically received

5. Over subscription conveys that the position of company in capital market is very good

6. Issued Capital and subscribed capital are equal.

Under Subscription:

1. Applications received are less than the shares issued

2. Generally, the refund situation does not arise

3. No pro-rata allotment

4. Under subscription may not satisfy the requirement of minimum subscription

5. It sends a message that the company does not enjoy full confidence of investors in capital market

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