Question

Which of the following has the highest cost of capital?
A) Loans
B.) Equity shares
C) Bonds
D.) Preference shares​

Answer 1

Equity shares has the highest cost of capital

Explanation:

• Equity shares are known as ordinary shares. They are entitled to get dividend only after the fixed rate of dividend is paid to preference shareholders.
• The rate of dividend varies from year to year depending on the profits gained by the company. The larger the profits the higher will be the rate of dividend for the shareholders of the company.
• At the time of winding up of the company, first the preference is given to preference shareholders and then if there is surplus then given to equity shareholders.

To know more:

Which of the following has the highest cost of capital?

https://brainly.in/question/7591857

Answer 2

B) Equity shares are the right answer.

Explanation:

• The primary definition of the cost of capital is absolutely the value, an entity should pay to elevate funds.
• The value of equity is a return, a corporation needs to pay its fair shareholders to make amends for the risk they undertake, with the aid of using making an investment in the quantity withinside the corporation.
• It is primarily based totally on the expectancy of the investors, therefore that is the best value of capital.

Features of Equity Shares Capital:

• Equity share capital stays with the employer. It is given returned handiest whilst the employer is closed.
• Equity Shareholders own voting rights and choose the employer’s management.
• The dividend rate at the fairness capital is predicated upon the obtainability of the surfeit capital.
• However, there may be no fixed rate of dividend at the fairness capital.

#SPJ6