What are the two major types of security finance?

Ownership securities (capital stock) and creditor securities (debt capital).

Fill in the blank: Equity shareholders have a ___ claim on income after paying fixed dividends to preference shareholders.

Residual

True or False: Preference shareholders have voting rights in company meetings.

False; preference shareholders do not have voting rights.

What is a key disadvantage of equity shares?

Equity shares are irredeemable, which can lead to overcapitalization.

What feature distinguishes secured debentures from unsecured debentures?

Secured debentures are backed by specific assets of the company, while unsecured debentures are not.

Fill in the blank: Retained earnings are often referred to as ___ because they are profits that a company reinvests.

Self finance

Which type of preference shares allows shareholders to claim dividends for previous unprofitable years?

Cumulative preference shares

How do debentures help in trading on equity?

By mixing debentures in its capital structure, a company can reduce its cost of capital and increase earnings per share.

True or False: The repayment of finance through security finance is often immediate and frequent.

False; repayment is generally very limited and not immediate.

What is the main advantage of using retained earnings for financing?

Retained earnings are a low-cost source of finance with no fixed obligations to pay dividends.

Fill in the blank: Irredeemable preference shares can only be redeemed when the company goes into ___ .

Liquidation