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      Question

      While evaluating long-term finance options, ABC Ltd.

      found that the cost of ordinary (equity) shares is the highest among all sources. What is the most likely reason for this?
      A Equity shares have a short repayment period. Correct Answer Incorrect Answer
      B Equity shareholders have no claim on company assets. Correct Answer Incorrect Answer
      C Equity shareholders expect higher returns due to higher risk. Correct Answer Incorrect Answer
      D Equity shareholders receive fixed interest payments. Correct Answer Incorrect Answer

      Solution

      The correct answer is C

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