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Question : Case Study: PQR Enterprises - Funding Strategies for Diversification

PQR Enterprises is a well-established conglomerate planning to diversify its business operations. The company is evaluating various sources of business finance to support its diversification plans.

Questions : Different Sources of Finance

What is the primary characteristic of equity shares?

Option 1: Fixed interest payments
  

Option 2: Ownership in the company
   

Option 3: Guaranteed redemption

 

Option 4: No voting rights


Team Careers360 15th Jan, 2024
Answer (1)
Team Careers360 18th Jan, 2024

Correct Answer: Ownership in the company
   


Solution : The correct answer is (b) Ownership in the company

Equity shares represent ownership or equity ownership in a company. Shareholders who hold equity shares have ownership rights in the company, which typically includes voting rights, the right to share in the company's profits (through dividends), and the right to participate in decision-making processes related to the company's operations and policies. Unlike debt securities (e.g., debentures), equity shares do not guarantee fixed interest payments or redemption; instead, the dividend payments to equity shareholders are variable and based on the company's profitability and the decisions of the company's board of directors.

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