[amp_mcq option1=”Equity shares” option2=”Preference shares” option3=”Debentures” option4=”Both B and C” correct=”option3″]
The correct answer is C. Debentures.
Equity shares and preference shares are both ownership securities. Debentures are debt securities.
Equity shares represent ownership in a company. Shareholders have the right to vote on company matters and to receive a share of the company’s profits.
Preference shares also represent ownership in a company, but they have a higher priority than equity shares when it comes to receiving dividends and assets in the event of a liquidation.
Debentures are loans that a company makes to investors. Investors receive a fixed interest rate on their investment, and the company is obligated to repay the loan at a specified date.
Debentures are not ownership securities because they do not represent a share in the company. Instead, they are a loan that the company makes to investors.