Question

Because the practice is in a market with increasing competition, discuss the pros and cons of accepting an equity share in place of additional salary.

Answer 1

Salary is a fixed source of income but the equity shares aren't so it's suitable for the people who are willing to take risk. High risk is associated with the equity shares at the same time there the profit from it will be also high. The returns from equity shares depends on profit of the company if the company have high profit the shareholders have right to claim dividend on the basis of surplus profit. If the company incurre loss the equity shareholders also loss their money. Equity shares offers a high profit at the same time the risk taking is also high. The investors who wishes to get higher returns can invest in equity shares. Its one of the way to earn money. So it's a good idea to invest in equity shares in the place of additional salary. The knowledge on shares values and stock exchange makes way to get good returns and also helps to make a better investment. The pros and cons on equity shares are given in the above notes. Equity shares are suitable for the persons who are expecting high dividend and with willingness to take risk.