A Ltd. issued a prospectus inviting applications for 2,000 shares. Applications were received for 3,000 shares and pro-rata allotment was made on the applications of 2,400 shares. If A has been allotted 40 shares, how many shares he must have applied for?

Correct option is C

The correct answer is (c) 48.
To find the number of shares applied for under pro-rata allotment, we use the ratio of shares applied for to shares allotted for that specific category. Here, the company accepted applications for 2,400 shares to allot 2,000 shares.
The ratio is:
Ratio = 2,400/2,000 = 6/5
Since A was allotted 40 shares, his applications are calculated as:
Applied Shares = 40 x 6/5 = 48 shares
INFORMATION BOOSTER
· Pro-rata Allotment: Occurs during over-subscription where shares are distributed proportionately.
· Calculation Formula: Applied = Allotted x (Total Applied / Total Allotted).
· Excess Application Money: This surplus is usually adjusted towards subsequent calls (Allotment/Final Call).
· Rejected Applications: 600 applications (3,000 - 2,400) were likely rejected and refunded.