Pls do not handwrite the answer, this is for easy reading Question 4:- a) Dual c
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Question
Pls do not handwrite the answer, this is for easy reading
Question 4:-
a) Dual class shares involve two classes of shares which have different voting rights. For example, 1 class A share carries1 vote while 1 Class B share carries 10 votes. Examples of dual class shares include Facebook. Recently, the SGX announced that it would allow companies having dual class shared to be listed.
Analyse why an investor is willing to buy shares that carry lower voting rights with supporting details? List 2 example to support answer.
Explanation / Answer
Why is an investor willing to buy shares that carry lower voting rights?
Lower voting rights shares are ideal for small investors because they hardly exercise their voting rights reason being only a few understand the company’s affairs with in-depth knowledge so as they can influence its actions. Small investors only buy shares to make money and happily give away voting rights in favor for those who have more management control. These shares are priced lower at the issuance and in return offer higher dividends. At times big companies issue these shares to fund large projects, this is really helpful to those who do not want control of the company but they are looking to take part in its big growth by making a big investment.