Correct Answer: Equity shares

Solution : The correct answer is (c) Equity shares

Equity shares represent ownership in a company and provide ownership rights and claims on the company's assets and earnings. When a company issues equity shares, it is essentially selling ownership stakes to investors, allowing them to become shareholders and participate in the company's growth and success. This is a common way for companies to raise funds for their operations, expansions, or other financial needs.

Correct Answer: Ownership rights in decision-making
    

Solution : The correct answer is (b) Ownership rights in decision-making

Equity shares provide ownership rights to shareholders, giving them the ability to participate in the decision-making process of the company, such as voting on key issues and electing the board of directors. On the other hand, preference shares typically do not grant voting rights, and while they entitle shareholders to fixed dividend payments before equity shareholders, they don't carry the same level of decision-making influence.

Correct Answer: Electronic records

Solution : The correct answer is (c) Electronic records

In dematerialization, physical share certificates are replaced by electronic records. Dematerialization involves converting physical share certificates, which are paper-based, into an electronic format. The ownership and details of the shares are recorded electronically, and these electronic records are stored in a dematerialized or demat account. This process eliminates the need for physical share certificates and instead relies on digital records to represent ownership of shares.

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.

Correct Answer: Assertion is true, but the reason is false.

Solution : The correct answer is (c) Assertion is true, but the reason is false.

The assertion is true. Equity shareholders indeed have ownership rights in a company, which means they have a claim on the company's assets and earnings. However, their voting power can be limited depending on the company's structure and the number of shares they hold.

The reason is false. Unlike preferred shareholders who are typically entitled to receive fixed dividends, equity shareholders (common shareholders) do not have a guaranteed or fixed dividend. Dividends for equity shareholders are decided by the company's board of directors and are subject to the company's profitability and dividend policy.

Correct Answer: Statement 1 is true, and statement 2 is false.
  

Solution : The correct answer is (a) Statement 1 is true, and statement 2 is false.

Statement 1 is true. Equity shareholders have ownership rights in the company, and they possess voting power in company decisions. They can participate in voting on important matters affecting the company.

Statement 2 is false. Equity shareholders are eligible to receive dividends from the company. In fact, one of the benefits of owning equity shares is the potential to receive dividends when the company distributes profits to its shareholders.

Correct Answer: Both enable companies to raise funds in international markets

Solution : The correct answer is (d) Both enable companies to raise funds in international markets

GDRs and ADRs are both financial instruments that enable companies to raise funds in international markets by issuing depositary receipts. GDRs are issued and traded outside the United States, while ADRs are specifically issued and traded in the United States. They allow companies to tap into a larger pool of investors and access capital from international markets without directly listing their shares on foreign stock exchanges. These instruments represent claims to shares in the issuing company and facilitate investment from investors in different regions around the world.

Correct Answer: Debentures provide ownership rights
 

Solution : The correct answer is (a) Debentures provide ownership rights

Debentures represent a form of debt where the holders (debenture holders) are creditors to the company and do not possess ownership rights in the company. They are entitled to receive a fixed rate of interest and the repayment of the principal amount at maturity.

On the other hand, equity shares represent ownership in the company and provide shareholders with ownership rights, including voting rights and the right to share in the company's profits (through dividends). Unlike debentures, equity shares do not involve fixed interest payments or repayment at maturity.

Correct Answer: Debentures pay fixed dividends
   

Solution : The correct answer is (b) Debentures pay fixed interest

Debentures pay fixed interest to the debenture holders, as they are a form of debt and represent a loan from the debenture holder to the issuing company. In contrast, equity shares represent ownership in the company and do not guarantee fixed dividend payments; the dividends paid to equity shareholders are typically based on the company's profitability and decisions made by the board of directors.

Correct Answer: Debentures pay fixed dividends
    

Solution : The correct answer is (b) Debentures pay fixed interest

This statement is correct. Debentures pay fixed interest to debenture holders, not dividends. The interest rate is predetermined and agreed upon at the time of issuing the debentures. Debentures are considered to be a safer investment than equity shares, as debenture holders have a higher claim on the company's assets in the event of liquidation. However, this also means that debenture holders earn a lower return than equity shareholders.