Company Finance Share Capital Quiz

What is known as share capital in a company?

• The total amount of company borrowings

• The total amount of shares issued by a company

• The total amount of dividends paid to shareholders

• The total amount of profits made by a company

What does a share represent in a company?

• A right of ownership of the company property

• A liability measured by the sum of money

• An investment in a company and a fraction of its capital

• A legal obligation to pay for the company's debts

Which type of shareholders are known as the owners of the company and take the biggest risk?

• Preference shareholders

• Bondholders

• Ordinary shareholders

• Debenture holders

What happens to ordinary shareholders if a company goes into liquidation?

• They are the first to be paid back

• They are the last category to be paid

• They receive a fixed dividend payment

• They have a right to the company's property

What do ordinary shareholders receive if the company does well?

• A fixed interest rate on their investment

• A larger return on their investment in the form of variable dividends

• The par value of their shares before preference shareholders

• A right to the company's property

What right do ordinary shareholders have if the company is being wound up?

• They have the right to a return of their capital if there are surplus assets

• They have the right to keep their shares

• They have the right to the company's property

• They have the right to be paid first before any creditors

What is a key characteristic of preference shares compared to ordinary shares regarding dividend payments?

• Preference shareholders receive a variable percentage of the dividend.

• Preference shareholders are entitled to a fixed dividend payment.

• Preference shareholders are paid dividends only if the company experiences growth.

• Preference shareholders receive dividends at the directors' discretion.

What happens to unpaid dividends of preference shares if a company does not release a dividend in a given year?

• They are forfeited and never paid.

• They are paid to ordinary shareholders instead.

• They are carried forward and paid as a priority when the next dividend is declared.

• They are converted into additional shares for the preference shareholders.

Do preference shareholders usually have the right to vote in general meetings?

• Yes, they have equal voting rights as ordinary shareholders.

• No, but they have the right to attend company meetings.

• Yes, but only on specific issues outlined in the company's articles of association.

• No, they have no involvement in company meetings at all.

What is the risk associated with preference shares in the event of a company winding up?

• Preference shareholders are paid first before any external creditors.

• Preference shareholders are paid only after all external creditors have been paid.

• Preference shareholders have no risk as they are guaranteed their investment back.

• Preference shareholders are paid simultaneously with ordinary shareholders.