Fundamentals of Financial Management, Third Edition

POINTS TO REMEMBER

1. What are the different kinds of corporate securities that help obtain funds from the market?
   • Equity shares
   • Preference shares
   • Debentures
   • Warrants
2. What are the features of equity shares?
   • Permanent capital base
   • No fixed dividend
   • Voting rights
   • Basis for raising borrowed capital
   • Public issue or private placement or both
3. What are pre-emptive rights of equity shareholders?
   • Additional shares, when issued, are first offered to the existing equity shareholders in proportion of their shareholding. It is their pre-emptive right.
4. How are preference shares different from equity shares?
   • Preference shares may be redeemed.
   • Preference shares have a prior claim on company’s assets and on dividend.
   • Preference shares have fixed dividend ...