Question

The Gross Liability Ratio of A, B, anc C is 5:32. The Liability of the Underwriters are as follows Mr. A= 3,000 shares, Mr 8 = 5,200
shares and Mr. C = (800) shares. Calculate the Net Liability of the underwriters after adjusting the surplus of 800 shares of Mr C
a) A= 3,000 and B = 5,800 shares
b) A= 2,500 and B = 5,500 shares
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c) A= 2,500 and B = 5,800 shares
d) A= 2,000 and B = 5,500 shares​

Answer 1

Answer:

The liability of the underwriter or underwriters will be determined in the following ways. They are:- 1. Complete Underwriting 2. Partial Underwriting 3. Firm Underwriting.

Way # 1. Complete Underwriting:

(a) When the whole issue of shares or debentures is underwritten by a single underwriter:

When the full issue is underwritten by one underwriter, then his liability will be equal to the number of shares or debentures underwritten minus shares or debentures applied for. If the issue is fully subscribed or oversubscribed, there will be no liability for the underwriter to take up any share or debenture

Explanation:

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Answer 2

Answer:

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