Tag: share and stock

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Questions Related to share and stock

Multiple choice commercial studies sources of business finance - 2 equity shares share and stock equity and preference shares

The money raised by issue of equity shares is called ________ share capital.

  1. Equity

  2. Preference

  3. Bonus

  4. Right
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The money raised by issue of equity shares is called equity share capital.Equity share represent the ownership of a company  and thus thus the capital raised by equity shares are also known as ownership capital or ownership funds.

Multiple choice commercial studies sources of business finance - 2 equity shares share and stock equity and preference shares

________ shares is the most important source of raising long term capital by a company.

  1. Equity

  2. Preference

  3. Bonus

  4. Right
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Equity shares is the most important source of raising long term capital by a company.

Equity shares represent the ownership of the a company and thus is known as owner's capital or owner's funds. Equity share capital is the prerequisite before creation of a company.

Multiple choice commercial studies sources of business finance - 2 equity shares share and stock equity and preference shares

Equity shares are suitable for investors who are willing to assume risk for ________ returns.

  1. Lower

  2. Higher

  3. Medium

  4. Equal
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Equity shares represent the ownership of the company. Equity share holders do not get a fixed dividend but are paid on the basis of earnings by the company.  They enjoy the rewards as well as bear the risks of theownership. Hence, Equity shares are suitable for investors who are willing to assume risk for higher returns.

Multiple choice commercial studies sources of business finance - 2 equity shares share and stock equity and preference shares

Which of the following is a merit of equity shares?

  1. Equity capital provides credit worthiness to the company.

  2. Equity shares are suitable for investors who are willing to assume risk for higher returns.

  3. Equity capital serves as permanent capital.

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Equity Share capital is also known as ownership capital or owner's funds. The merits of equity shares are, They provide credit worthiness to the company. Equity shares are suitable for investors who are willing to assume risks for higher returns, Equity capital serves as permanent capital.

Multiple choice commercial studies sources of business finance - 2 equity shares share and stock equity and preference shares

The cost of equity shares is generally _______ as compared to the cost of raising funds through other sources.

  1. more

  2. less

  3. medium

  4. equal
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Equity shares is the most important source of raising long term capital by a company. Equity shares represent the ownership of the a company and thus is known as owner's capital or owner's funds. 

Hence the cost of equity shares is generally higher as compared to the cost of raising funds through other sources.

Multiple choice commercial studies sources of business finance - 2 equity shares share and stock equity and preference shares

As equity capital stands last in the list of claims, it provides a cushion for __________.

  1. Debtors

  2. Creditors

  3. Owners

  4. Customers
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Equity capital are permanent source of capital and can be only returned at the time of liquidation of the company. Thus equity capital stands last in the list of claims, it provides a cushion for creditors claims that needs to be settled at the time of liquidation.

Multiple choice commercial studies sources of business finance - 2 equity shares share and stock equity and preference shares

Investors who need steady income may not prefer equity shares as they get ___________ returns.

  1. Fixed

  2. Fluctuating

  3. Higher

  4. Lower
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Investors who need steady or fixed dividend from the capital invested may not prefer equity shares as they fluctuating returns on the basis of the earnings of the company and receive all the leftovers after all the other claims are delt with.

Multiple choice commercial studies sources of business finance - 2 equity shares share and stock equity and preference shares

Equity capital serves as ____________ capital as it is to be repaid only at the time of liquidation of a company.

  1. Temporary

  2. Permanent

  3. Fluctuating

  4. Fixed
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Equity share capital is the prerequisite before the creation of a company. 

It is a source of finances raised for the formation of the company and it also represents the ownership of the company.
Equity capital serves as a permanent capital as it is to be repaid only at the time of liquidation.

Multiple choice commercial studies sources of business finance - 2 equity shares share and stock equity and preference shares

Equity shares represent the __________ of a company.

  1. Creditors

  2. Debtors

  3. Ownership

  4. Capital
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Equity shares is the most important source of raising long term capital by a company. 

Equity shares represent the ownership of the a company and thus is known as owner's capital or owner's funds. Equity share capital is the prerequisite before creation of a company.

Multiple choice commercial studies sources of business finance - 2 equity shares share and stock equity and preference shares

If the rights of a particular class of share holders is to be changed then the company should call __________.

  1. shareholders meeting

  2. directors

  3. class meetings

  4. preference shareholder meeting
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A company is an association of several persons. Decisions are made according to the view of the majority. Class meetings are meetings which are held by holders of a particular class of shares, e.g., preference shareholders. Such meetings are normally called when it is proposed to vary the rights of that particular class of shares.