Identify the point of merit of equity shares-Both -a- and -b-None of the aboveCredit worthiness-No compulsion to pay dividend

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Standard XI

Business Studies

Equity Capital

Identify the ...

Question

Identify the point of merit of equity shares?

Credit worthiness

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No compulsion to pay dividend

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Both (a) and (b)

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None of the above

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Companies with a higher growth potential are likely to

(a) pay lower dividends

(b) pay higher dividends

(d) none of the above

Differentiate between equity shares and preference shares on the basis of :

(a) Payment of dividend

(b) Refund of capital

(d) Voting Rights

Give two merits of issuing equity shares.

Payment of fixed rate of dividend to preference shares may enable a company to declare higher rates of dividend for the equity shareholders in good times.

There is least risk in equity as the share capital has to be repaid only at the time of winding up and dividends need not be paid if no profits are available.

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