Subscription Price

Posted in Finance, Accounting and Economics Terms, Total Reads: 1221

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 .

Example :

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.

Hence, this concludes the definition of Subscription Price along with its overview.

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