Posted in Finance, Accounting and Economics Terms, Total Reads: 643
Definition: Subscription Price
The price at which the stocks are offered to its existing shareholders. It is also called as the issue price. It is usually sold at the common price for all the buyers . The price is usually fixed at kept slightly below the market price.
In case of warrants the subscription price is maintained at differential rates for existing shareholders and the new subscribers .
In case of some warrants a right issue comes out at 1:1 . The initial lot has been bought at 300 Rs /Share for 100 shares . now the present issue offers the same number of shares at Rs 200/ Share . The upper limit for subscription being present number of shares held. The average subscription price comes down to 250
Very often the market price is also close to Rs 250/Share . The buyer does not occur a profit or a loss on the transaction but from a company’s viewpoint its EPS would be reduced and if the retained earnings are utilised in the future projects then its present EPS can be maintained.