Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
For a corporation, equity capital comes in two forms. What are they?
Expert Solution
Step 1
Every company has two major types of financing one is through raising equity shares and the other is through debentures. Here, debentures are said to bear the fixed income securities when compared to equity holders, as the latter receives the dividend after paying all the external debts. And the equity holders are only the owners of the company as they bear the risk of losing interest and money invested, unlike debentures.
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