What risks do ordinary shareholders take that other suppliers of long-term capital do not?

Expert Solution

Ordinary shareholders own the common shares of the company and thus are owners of the company. Unlike other long term capital provider common shareholders do not receive annual interest payment, the dividend are paid however the frequency is not fixed and amount is also not fixed. Dividend payment is subject to funds availability with company. Also, ordinary shareholders so not received the amount invested back on maturity period as there is no such maturity period like in other long term capital which are repaid on maturity. Ordinary shareholders are liable to liability to the extent of amount invested in company which is not the case in other suppliers of long term capital. Also, in case of liquidation of company ordinary shareholders receive the residual amount after payment is made to all other long term capital suppliers. Thus, ordinary shareholders are subject to number of risks of amount invested.

jeff jeffy answered 2 years ago

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