Understanding Shares, Debentures, and Funding for Companies

The video tutorial discusses various sources of funds for businesses, focusing on shares and debentures. It explains the role of shareholders and the rights they enjoy, as well as the nature of debentures and bonds as borrowed funds. The tutorial further delves into the types of shares, including equity and preference shares, and their respective characteristics. It provides a detailed examination of preference shares, including options like convertible and cumulative shares. Finally, the video outlines methods for issuing shares, such as IPOs and private placements.

What is a key difference between how sole traders and companies can raise funds?

• Sole traders can issue shares to the public.

• Companies can raise funds through debentures.

• Companies cannot raise funds from banks.

• Sole traders can borrow from the general public.

What rights do shareholders typically enjoy in a company?

• They are not involved in the company's affairs.

• They are guaranteed a fixed interest on their investment.

• They have the right to attend meetings and vote on company decisions.

• They can demand repayment of their investment at any time.

How do debenture holders differ from shareholders?

• Debenture holders are owners of the company.

• Debenture holders are creditors and receive fixed interest.

• Debenture holders have voting rights in company decisions.

• Debenture holders can attend shareholder meetings.

What is a characteristic of preference shares?

• They receive dividends before equity shareholders.

• They always have voting rights in all company matters.

• They are the majority of a company's share capital.

• They can be converted into debentures.

What is a convertible preference share?

• A share that can be converted into a bond.

• A share that can be converted into an equity share.

• A share that cannot be converted into any other type.

• A share that guarantees a fixed dividend.

What is the term for the first time a company offers shares to the public?

• Private Placement

• Bonus Issue

• Initial Public Offering (IPO)

• Follow-on Public Offer (FBO)

Which method allows a company to issue shares without being listed on a stock exchange?

• Rights Issue

• Initial Public Offering

• Private Placement

• Follow-on Public Offer