Discount
Forfeiture
Premium
Surplus
Answer is Right!
Answer is Wrong!
The correct answer is C. Premium.
A premium is the amount by which the market price of a security exceeds its face value. In
the case of a share, the face value is the amount that the company is legally obligated to pay to the shareholder if the company is liquidated. The market price of a share is the price at which it is currently trading on the stock market.A discount is the opposite of a premium. It is the amount by which the market price of a security is below its face value.
A forfeiture is a penalty that is imposed on a person who fails to fulfill a legal obligation. For example, if a shareholder fails to pay the annual dividend on a share, they may be subject to a forfeiture of their shares.
A surplus is an excess of assets over liabilities. In the case of a company, a surplus is an excess of the company’s assets over its debts. A surplus can be used to pay dividends to shareholders, to invest in new projects, or to reduce the company’s debt.