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Question : Case Study: ABC Corporation - Financing Growth Strategies

ABC Corporation, a leading manufacturing company, is looking to finance its growth strategies. The company is exploring various sources of business finance to achieve its expansion goals.

Questions : Different Sources of Finance

What is the primary characteristic of equity shares?

Option 1: Fixed dividend payments
  

Option 2: Ownership in the company
 

Option 3: Guaranteed redemption

 

Option 4: No voting rights


Team Careers360 8th Jan, 2024
Answer (1)
Team Careers360 10th Jan, 2024

Correct Answer: Ownership in the company


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

Equity shares represent ownership in a company, conferring the shareholder with ownership rights and an ownership stake in the company. Equity shareholders have a claim on the company's assets and earnings and typically have voting rights, allowing them to participate in key decisions and the governance of the company. Unlike debt instruments such as debentures, equity shares do not entail fixed dividend payments or guaranteed redemption. Instead, dividends to equity shareholders are subject to profitability and the decisions of the company's board of directors.

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