Question

“Equity Shares are known as ‘risk capital’”.what is your view about it?

Answer 1

Answer:

Equity shares capital is called risk capital because : 1. Equity shares have the risk of fluctuating returns and the risk of fluctuating market value of shares. ... There are too many procedural delays and too many time consuming formalities to be completed before any public issue of shares can be made.

Answer 2

Answer:

Equity share capital is called risk capital because equity shareholders are the last receive returns in a company, that return is only possible if the business is making a profit.

This makes it risky capital as the returns depend on the profits of the company.