after its incorporation jolly ltd. company raised funds which were prerequisite for creation of the company these bunds were most important sources of raising long term capital they also declared these funds to be risky as well as owner's funds provides of these funds will not get fixed dividend. -(a)identify the source of funds raised by jolly ltd. (b)explain any two merits and limitations of each of above identified source of funds.
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Answer: a.Source of funds raised:
equity shares
Explanation:
merits:
1. Suitable for adventures investors: these funds will be raised by those people who are ready to take risk. The are looking for the share in capital rather than a fixed rate of devident.
2. No obligation on dividend: there will be no obligat or burden on the company to pay dividends as it depends on profit available
Demirits:
1. Dilution of control:additional issue of these shares dilutes controls as they have voting rights
2.Risk of fluctuating returns:these shares are not suitable for investors who desire to earn safe returns...
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