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In a public company, how are shares typically characterized in terms of their transferability?
- a)Shares are non-transferable by law.
- b)Shares can be transferred only among family members.
- c)Shares are freely transferable.
- d)Shares can be transferred only with government approval.
Correct answer is option 'C'. Can you explain this answer?
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In a public company, how are shares typically characterized in terms o...
In a public company, shares are generally freely transferable. Shareholders have the statutory right to transfer their shares to others. While there can be reasonable restrictions specified in the company's articles, the general rule is that shares in a public company are transferable without undue restrictions.
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In a public company, how are shares typically characterized in terms o...
Shares Transferability in a Public Company
Shares in a public company are typically characterized by their transferability, which refers to the ease with which they can be bought and sold by shareholders.
Freely Transferable
In most cases, shares in a public company are considered freely transferable. This means that shareholders are able to buy and sell their shares on the open market without any restrictions.
Regulations
While there are regulations and procedures that govern the buying and selling of shares, such as the need to notify the company of any changes in ownership, shareholders are generally free to transfer their shares to anyone they choose.
Market Liquidity
This free transferability of shares is one of the key benefits of investing in a public company, as it allows for greater market liquidity and the ability to easily divest one's holdings if desired.
Investor Confidence
Furthermore, the ability to freely transfer shares can also enhance investor confidence in the company, as it demonstrates transparency and a commitment to providing shareholders with the opportunity to realize the value of their investment.
In conclusion, shares in a public company are typically characterized by their free transferability, which is a key feature that distinguishes them from shares in private companies or other types of investments.
Shares in a public company are typically characterized by their transferability, which refers to the ease with which they can be bought and sold by shareholders.
Freely Transferable
In most cases, shares in a public company are considered freely transferable. This means that shareholders are able to buy and sell their shares on the open market without any restrictions.
Regulations
While there are regulations and procedures that govern the buying and selling of shares, such as the need to notify the company of any changes in ownership, shareholders are generally free to transfer their shares to anyone they choose.
Market Liquidity
This free transferability of shares is one of the key benefits of investing in a public company, as it allows for greater market liquidity and the ability to easily divest one's holdings if desired.
Investor Confidence
Furthermore, the ability to freely transfer shares can also enhance investor confidence in the company, as it demonstrates transparency and a commitment to providing shareholders with the opportunity to realize the value of their investment.
In conclusion, shares in a public company are typically characterized by their free transferability, which is a key feature that distinguishes them from shares in private companies or other types of investments.
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In a public company, how are shares typically characterized in terms of their transferability?a)Shares are non-transferable by law.b)Shares can be transferred only among family members.c)Shares are freely transferable.d)Shares can be transferred only with government approval.Correct answer is option 'C'. Can you explain this answer?
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