Multiple Choice Questions on Rohit has 500 shares of Ruchi Soya Ltd Ruchi Soya further issued 1 00 000 equity shares and offered ........... for Common University Entrance Test (CUET) Preparation

Rohit has 500 shares of Ruchi Soya Ltd Ruchi Soya further issued 1 00 000 equity shares and offered ...........

Business Studies (CUET) FINANCIAL MANAGEMENT

Rohit has 500 shares of Ruchi Soya Ltd. Ruchi Soya further issued 1,00,000 equity shares and offered Rohit to buy 1 more equity share for every 5 shares held by him. Identify the method of floatation.

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CUET BUSINESS STUDIES Previous Year Paper (2022)

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Right issue

Private placement

Offer through prospectus

Offer for sale

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Explanation:

The Right Issue is a method of floatation where a company gives existing shareholders the opportunity to buy additional shares in proportion to the number of shares they already own at a price lower than the market price.

In the question, Rohit is offered to buy 1 share for every 5 shares he holds, which indicates that the company is issuing shares to existing shareholders — a clear example of a Right Issue.

Why Other Options Are Incorrect:

Option	Explanation
B: Private placement	It is when shares are offered to selected individuals or institutions, not existing shareholders.
C: Offer through prospectus	It is when shares are offered to the general public by issuing a prospectus.
D: Offer for sale	It is when securities are sold to intermediaries, who then sell them to the public.

Conclusion:

A Right Issue helps companies raise additional funds while giving preference to existing shareholders. Therefore, the correct answer is:
? Option A: Right issue