[amp_mcq option1=”Equity shares” option2=”Loans” option3=”Bonds” option4=”Preference shares” correct=”option1″]<\/p>\n
The correct answer is A. Equity shares.<\/p>\n
Equity shares are the most expensive form of capital because they represent the ownership of a company. As such, they are the most risky form of capital, and investors demand a higher return for taking on this risk.<\/p>\n
Loans are less risky than equity shares because they are secured by assets. This means that if the company defaults on the loan, the lender can seize the assets to repay the loan. As a result, lenders are willing to accept a lower return on loans than on equity shares.<\/p>\n
Bonds are even less risky than loans because they are typically issued by governments or large, well-established companies. These companies are considered to be very unlikely to default on their bonds, so investors are willing to accept a very low return on bonds.<\/p>\n
Preference shares are a type of equity share that has a fixed dividend. This means that investors in preference shares receive a fixed amount of money each year, regardless of how well the company performs. As a result, preference shares are less risky than ordinary equity shares, and investors demand a lower return on preference shares.<\/p>\n
In conclusion, equity shares are the most expensive form of capital because they are the most risky form of capital. Loans are less risky than equity shares, bonds are even less risky than loans, and preference shares are less risky than ordinary equity shares.<\/p>\n","protected":false},"excerpt":{"rendered":"
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