Sources of Business Finance — OCM STD 11 Commerce — Question
Gujarat BoardEnglish MediumSTD 11 CommerceOCMSources of Business Finance3 Marks
Question
Why ordinary (equity) share is risky share ?
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Answer
Ordinary equity share is considered a risky share. It is not compulsory to pay dividend to its to shareholders. They get dividend declared in the general meeting held by management.
The rate of dividend is not fixed. When the company is dissolved, first of all payment is made to its creditors, preference shareholders, banks and if there is fund it is distributed among equity shareholders in proportion. Its proportion is mostly very little.
They have to lose their money. That is why, equity share is called risky share.
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