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Sources of Business Finance — OCM STD 11 Commerce — Question

Gujarat BoardEnglish MediumSTD 11 CommerceOCMSources of Business Finance3 Marks
Question
Explain advantages and limitations of Ordinary Equity Share.
✓

Answer

  • Advantages of Ordinary Equity Shares :
  • No burden of paying dividend
  • Assets remain burden free
  • No burden of returning capital
  • Benefits of Right Share and Bonus Share is avail
  • Right to elect management
  • Purchase and sale is carried out in stock market
  • Company can borrow more Fund.
  • Limitations of Ordinary Equity Shares :
  • Uncertainty of dividend
  • Expense of the source of finance increases
  • Interest of minority shareholders is not maintained
  • Interference in management
  • Speculation is encouraged.

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