what is equity shares ? merits and demerits of equity shares? what is preference shares?merits and demerits of preference shares? what is debentures , merits and demerits?
Answers
Answered by
16
Equity Share:
The capital of a corporation is split into shares. every share forms a unit of possession of a corporation and is obtainable purchasable thus on raise capital for the corporate.
Merits:
1.Equity shares are terribly liquid and may be simply sold-out within the capital market.
2.In case of high profit, they get dividend at higher rate.
3.Equity shareholders have the proper to manage the management of the corporate.
4.The equity shareholders get profit in 2 ways in which, yearly dividend and appreciation within the price of their investment.
Demerits:
1.Equity shareholders get dividend providing there remains any profit when paying debenture interest, tax and preference dividend. Thus, obtaining dividend on equity shares is unsure per annum.
2.Equity shareholders square measure scattered and unorganized, and therefore they're unable to exercise any effective management over the affairs of the corporate.
Preference Share:
Preference shares enable AN capitalist to have a stake at the provision company with a condition that whenever the corporate decides to pay dividends, the holders of the stock are the primary to be paid.
Merits:
1.Appeal to Cautious Investors
2.No Obligation for Dividends
3.No Interference
4.Trading on Equity
5.No Charge on Assets
6.Flexibility
7.Variety
Demerits:
1.Fixed Obligation
2.Limited Appeal
3.Low Return
4.No Voting Rights
5.Fear of Redemption
Debentures:
A long haul security yielding a settled rate of interest, issued by an organization and secured against resources. In the event that an organization needs supports for augmentation and advancement reason without expanding its offer capital, it can obtain from the overall population by issuing authentications for a settled timeframe and at an altered rate of hobby.
Merits:
1.Issue of debenture does not bring about weakening of enthusiasm of value shareholders as they don't have right either to vote or tune in the administration of the organization.
2.Interest on debenture is an expense deductible use and in this way it spares wage charge.
3.Cost of debenture is moderately lower than inclination shares and value offers.
4.Issue of debentures is worthwhile amid times of swelling.
5.Interest on debenture is payable regardless of the fact that there is a misfortune, so debenture holders bear no danger.
Demerits:
1.Installment of enthusiasm on debenture is required and henceforth it gets to be weight if the organization brings about misfortune.
2.Debentures are issued to exchange on value however an excess of reliance on debentures expands the monetary danger of the organization.
3.Redemption of debenture includes a bigger measure of money outpouring.
4.During melancholy, the benefit of the organization continues declining and it gets to be troublesome for the organization to pay interest.
The capital of a corporation is split into shares. every share forms a unit of possession of a corporation and is obtainable purchasable thus on raise capital for the corporate.
Merits:
1.Equity shares are terribly liquid and may be simply sold-out within the capital market.
2.In case of high profit, they get dividend at higher rate.
3.Equity shareholders have the proper to manage the management of the corporate.
4.The equity shareholders get profit in 2 ways in which, yearly dividend and appreciation within the price of their investment.
Demerits:
1.Equity shareholders get dividend providing there remains any profit when paying debenture interest, tax and preference dividend. Thus, obtaining dividend on equity shares is unsure per annum.
2.Equity shareholders square measure scattered and unorganized, and therefore they're unable to exercise any effective management over the affairs of the corporate.
Preference Share:
Preference shares enable AN capitalist to have a stake at the provision company with a condition that whenever the corporate decides to pay dividends, the holders of the stock are the primary to be paid.
Merits:
1.Appeal to Cautious Investors
2.No Obligation for Dividends
3.No Interference
4.Trading on Equity
5.No Charge on Assets
6.Flexibility
7.Variety
Demerits:
1.Fixed Obligation
2.Limited Appeal
3.Low Return
4.No Voting Rights
5.Fear of Redemption
Debentures:
A long haul security yielding a settled rate of interest, issued by an organization and secured against resources. In the event that an organization needs supports for augmentation and advancement reason without expanding its offer capital, it can obtain from the overall population by issuing authentications for a settled timeframe and at an altered rate of hobby.
Merits:
1.Issue of debenture does not bring about weakening of enthusiasm of value shareholders as they don't have right either to vote or tune in the administration of the organization.
2.Interest on debenture is an expense deductible use and in this way it spares wage charge.
3.Cost of debenture is moderately lower than inclination shares and value offers.
4.Issue of debentures is worthwhile amid times of swelling.
5.Interest on debenture is payable regardless of the fact that there is a misfortune, so debenture holders bear no danger.
Demerits:
1.Installment of enthusiasm on debenture is required and henceforth it gets to be weight if the organization brings about misfortune.
2.Debentures are issued to exchange on value however an excess of reliance on debentures expands the monetary danger of the organization.
3.Redemption of debenture includes a bigger measure of money outpouring.
4.During melancholy, the benefit of the organization continues declining and it gets to be troublesome for the organization to pay interest.
Lipimishra2:
Wow..nice answer pearlya
Thank U so much Mishra :)
My pleasur :)
Similar questions