Question

Why equity shareholders are called risk bearers?

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. In times of adversity, these may be low returns or even no returns.

Explanation:

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Answer 2

Equity shareholders are known as risk bearers in a firm because their returns are not fixed.

Explanation:

• Equity shareholders are the ones who invest their capital in the equity shares. The returns on their money are not fixed, no matter the quantum of money they invest.
• In case the profits of the firm are reducing, the capital invested by the equity shareholders evades, and risks are faced by these shareholders.  Their wealth is dependent on the performance of the firm and its profits. So they are called risk bearers.