Give two advantages of public deposit from the point of view of a comp

1.	Give two advantages of public deposit from the point of view of a company.
Answer» (a) No legal formalities: This system of raising finance is simple as it does not involve legal formalities which are required in the issue of shares and debentures. (b) Economical: It is economical because the interest paid on deposits is usually less than the interest rate charged by banks and special financial institutions in advancing money. Moreover, deposits are returned whenever their need is not felt. (c) Higher dividends: The company can adopt the policy of trading on equity if the company is earning more than the fate of interest to its public deposits. The company can pay a higher dividend to its shareholders and create a better reputation in the market.

Give two advantages of public deposit from the point of view of a company.

Answer»

(a) No legal formalities: This system of raising finance is simple as it does not involve legal formalities which are required in the issue of shares and debentures.

(b) Economical: It is economical because the interest paid on deposits is usually less than the interest rate charged by banks and special financial institutions in advancing money. Moreover, deposits are returned whenever their need is not felt.

(c) Higher dividends: The company can adopt the policy of trading on equity if the company is earning more than the fate of interest to its public deposits. The company can pay a higher dividend to its shareholders and create a better reputation in the market.

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