The Equity Share:
1. represents ownership of shareholder in company
2. comes with entrepreneurial risk
3. comes with security backed by companies assets
Which among the above is / are correct?
Equity is an instrument of ownership. Equity shares are instruments issued by companies to raise capital and it represents the title to the ownership of a company. You become an owner of a company by subscribing to its equity capital (whereby you will be allotted shares) or by buying its shares from its existing owner(s). As a shareholder, you bear the entrepreneurial risk of the business venture and are entitled to benefits of ownership like share in the distributed profit (dividend) etc. The returns earned in equity depend upon the profits made by the company. Company’s future growth etc.
This question is a part of GKToday's Integrated IAS General Studies Module