Commercial Applications
Assertion (A): Transferability of shares makes public companies more attractive to investors.
Reasoning (R): Public companies allow shareholders to transfer shares without restrictions, providing liquidity to their investments.
- Both A and R are true, and R is the correct explanation of A.
- Both A and R are true, but R is not the correct explanation of A.
- A is true, but R is false.
- A is false, but R is true.
Joint Stock Company
2 Likes
Answer
Both A and R are true, and R is the correct explanation of A.
Reason — Both Assertion and Reasoning are true. The shares of a public company are listed on the stock exchange and are freely transferable. This means a member can easily sell his shares whenever he wants and need not keep them for life. Such liquidity of investment stimulates investment in industrial and commercial enterprises, which is exactly why transferability of shares makes public companies attractive to investors.
Answered By
1 Like
Related Questions
Statement I : A shareholder can't withdraw his membership from the company by transferring his shares.
Statement II : In actual practice some restrictions are placed on the transfer of shares.
- Only I is correct
- Only II is correct
- Both I and II are correct
- Both I and II are wrong
A joint stock company is a …………… association of certain persons formed to carry out a particular purpose in common.
- voluntary
- corporate
- legal
- liable
Statement I : A company is an artificial person created by law having no physical body of a natural human being.
Statement II : A company can't exist in the contemplation of law.
- Only I is correct
- Only II is correct
- Both I and II are correct
- Both I and II are wrong
The merit of a joint company is
- Continuity of Existence
- Capital Formation
- Limited Liability
- All of these