Practicing Success

Target Exam

CUET

Subject

Entrepreneurship

Chapter

Resource Mobilisation

Question:

The primary advantage an entrepreneur stands to gain by going public is access to capital. In addition, the capital does not have to be repaid and does not involve an interest charge. In this context which of the following is a reward for the shareholder's in lieu of their capital contribution?

Options:

Say in the management.

Appreciation in value of shares

Fixed Rate of Dividend

All of the above.

Correct Answer:

Appreciation in value of shares

Explanation:

The primary advantage an entrepreneur stands to gain by going public is access to capital. In addition, the capital does not have to be repaid and does not involve an interest charge. The only reward the IPO investors seek is an appreciation of their investment and possibly dividends.