Features of Equity Shares - Topic 2

Select the correct option.

________are residual claimants against the income or assets of the company.

• Bondholders

• Equity Shareholders

• Debentureholders

Answer explanation

Equity shareholders as owners are residual claimants to all earnings after expenses, taxes, etc. are paid. A residual claim means the last claim on the earnings of company. They bear more risk than preference shareholders.

Select the correct option.

________shares are issued free of cost to existing equity shareholders.

• Bonus

• Right

• Equity

Answer explanation

Bonus shares are issued as gift to equity shareholders. Bonus shares are issued out of profit and reserves of the company.

Select the correct option.

A company cannot exist without __________shares.

• preference

• bonds

• equity

Give a word or a term or a phrase.

The ‘real masters’ of the company.

Answer explanation

Equity shareholders have the right to vote in the company’s decisions and bear the ultimate risk associated with ownership.

Give a word or a term or a phrase.

Name the shareholders who participate in the management.

Give a word or a term or a phrase.

The value of share which is written on the share certificate.

Give a word or a term or a phrase.

The value of share which is determined by demand and supply forces in the share market.

State whether true or false.

Equity share capital is known as venture capital.

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State whether true or false.

Equity shareholders enjoy fixed rate of dividend.

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State whether true or false.

Equity shareholders are described as ‘shock absorber’ when company has financial crisis.

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