Question

Define a share. What are two types of shares? Explain two features of each.

Answer 1

When capital is divided into smaller pieces then it will known as share.

It is divided into two types

1- Equity Share

Features-

a) Take participation in management.

b) Rate of dividend isn't fixed it's fluctuating and depends upon the profit earn by the firm in a particular year.

2- Preference Share

Features-

a) Enjoys two preferential rights over Equity shares

1- Repayment of capital.

2- Rate of dividend at fixed rate.

b) They don't take participation in management.