Home
/
Business
/
Which of the following statement(s) is/are true?(Select the correct answer from the options below the statements) (1) Ordinary share capital represents the risk free capital of a business and forms an important part of a business' financial structure (2) Ordinary share capital represents the risk capital of a business and forms the cornerstone of a business financial structure (3) Ordinary share capital has a fixed rate dividend (2) only (1) only (3) only (1) and (3)

Question

Which of the following statement(s) is/are true?(Select the correct answer
from the options below the statements)
(1) Ordinary share capital represents the risk free capital of a business and
forms an important part of a business' financial structure
(2) Ordinary share capital represents the risk capital of a business and forms the
cornerstone of a business financial structure
(3) Ordinary share capital has a fixed rate dividend
(2) only
(1) only
(3) only
(1) and (3)

Which of the following statement(s) is/are true?(Select the correct answer from the options below the statements) (1) Ordinary share capital represents the risk free capital of a business and forms an important part of a business' financial structure (2) Ordinary share capital represents the risk capital of a business and forms the cornerstone of a business financial structure (3) Ordinary share capital has a fixed rate dividend (2) only (1) only (3) only (1) and (3)

expert verifiedVerification of experts

Answer

4.1184 Voting
avatar
WhitneyMaster · Tutor for 5 years

Answer

; <br /><br />Option: (2) only

Explain

## Step 1: Understanding crucial terms in the question: <br />Ordinary share capital in business pertains to the money secured by business through selling ordinary shares or stocks to the general public, who then become shareholders of the company. The term "ordinary" essentially means that such shares do not involve any special rights or privileges. Essentially shareholders stake a claim on their profits (if the company makes it), commonly known as dividends, making it a type of risk capital in the event the company collapses and doesn't cover its costs. <br /><br />## Step 2: Conclude each statement:<br />- The statement '(1) Ordinary share capital represents the risk-free capital of a business and forms an important part of a business' financial structure' is **False** as having ordinary shares involves proportional risks depending on the success or failure of the company.<br />- The statement '(2) Ordinary share capital represents the risk capital of a business and forms the cornerstone of a business' financial structure' is **True**, as the correct definition reflects it is supposed to bare risk capital in proportion.<br />- The statement '(3) Ordinary share capital has a fixed rate dividend' is **False**, it does not have a fixed really. Dividend rates depend on the success and profitability level of a business it is not mandatory for companies to declare them.<br /><br />## Step 3: Select the valid choice:<br />After interpreting all statements as stated above we conclude that only statement 2: Ordinary share capital symbolises risk bearing financial value for the business establishment is correct.
Click to rate:

Hot Questions

More x