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Sources of Business Finance — Business Studies STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceBusiness StudiesSources of Business Finance1 Mark
Question
Why is equity share capital called 'Risk Capital'?
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Answer

Equity shareholders get return only when profits is left after paying interest on debentures and fixed return on preference shares. Therefore, it is called risk capital as it bears maximum risk.

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