Question : Which of the following is not a characteristic of equity shares?
Option 1: Voting rights
Option 2: Fixed dividend
Option 3: Residual claim on assets
Option 4: Higher risk
Correct Answer: Fixed dividend
Solution : The correct answer is (b) Fixed dividend.
Equity shares, also known as common shares or ordinary shares, represent ownership in a company. Fixed dividend is not a characteristic of equity shares. Unlike preference shares, equity shares do not have a fixed dividend rate. Dividends on equity shares are usually declared by the company's board of directors and are subject to the company's profitability and available funds.
Question : What is the main advantage of issuing equity shares for a company?
Option 1: Lower interest payments
Option 2: No obligation to repay
Option 3: Increased voting rights
Option 4: Fixed dividend payments
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile