Equity Shares Trivia Quiz!

Equity shareholders are rewarded with dividends. Dividends are a portion of a company's profits that are distributed to shareholders as a return on their investment. This distribution is typically in the form of cash, but it can also be in the form of additional shares or other assets. Dividends are a way for companies to share their profits with shareholders and provide them with a financial incentive to continue investing in the company.

The statement is true because when a company decides to issue new shares, it usually offers them to its existing equity shareholders first. This is known as a rights issue, where shareholders have the right to purchase additional shares in proportion to their existing holdings before they are offered to the general public. This allows existing shareholders to maintain their proportional ownership in the company and also gives them the opportunity to increase their investment if they choose to do so.

Equity shares represent ownership in a company and their income is derived from dividends, which are not guaranteed and can vary depending on the company's performance. Additionally, equity share income can also come from capital gains, which are dependent on the fluctuations in the stock market. Therefore, the income from equity shares can indeed be uncertain and irregular.

Equity shareholders are the owners of a company and have a claim on the company's profits. They are entitled to receive dividends at the end, which are a portion of the company's profits distributed to shareholders. Debenture holders, preference shareholders, and bond shareholders do not have the same ownership rights as equity shareholders and therefore do not receive dividends in the same manner.

Equity share capital is a type of funding that represents ownership in a company. It is obtained by issuing shares to investors in exchange for their investment. Unlike short-term or medium-term capital, equity share capital is considered a long-term source of funding because it represents a permanent investment in the company's ownership. This capital remains in the company for the long run and is not required to be repaid like a loan or other forms of short-term financing.

The statement is false. Preference shareholders are not the risk bearers in a company. They have a preferential right to receive a fixed dividend before the ordinary shareholders, but they do not bear the same level of risk as the ordinary shareholders. The ordinary shareholders bear the risk of the company's performance and are entitled to the residual profits after the preference shareholders have been paid their fixed dividend.

The statement that the preference shareholder has a controlling power is false. Preference shareholders have a preference over ordinary shareholders in terms of receiving dividends and getting their capital back in case of liquidation. However, they do not typically have voting rights and therefore do not have the power to control the company's decisions or operations.

Equity shareholders do not receive interest at the end. Unlike debt holders, who receive fixed interest payments, equity shareholders are entitled to dividends, which are a share of the company's profits. Dividends are not guaranteed and are only paid out if the company has sufficient profits. Therefore, the statement that equity shareholders get interest at the end is false.

Equity shares are issued in proportion to the shares held, meaning that the number of equity shares a shareholder receives is directly related to the number of shares they already own. This is a common practice in corporate finance, ensuring that existing shareholders maintain their proportionate ownership in the company when new equity shares are issued. Right shares, bonus shares, and preference shares may also be issued in certain circumstances, but they do not necessarily follow the principle of being issued in proportion to the shares held. Bond shares, on the other hand, are not a commonly used term in finance and may not be relevant to the context of the question.

Equity shareholders have the right to vote and participate in the decision-making process of the company, which is referred to as their "Rights." Additionally, equity shareholders have the potential for capital appreciation, meaning that the value of their shares can increase over time. This is due to the fact that equity shareholders are owners of the company and benefit from its growth and profitability. Therefore, the given answer correctly identifies two key features of equity shareholders: their rights and the potential for capital appreciation.