MANAGEMENT

Detailed explanation-1: -Trading on equity increases the return on equity shares with a change in the capital structure of a company.

Detailed explanation-2: -The concept of financial management which increases the return to equity shareholders due to the presence of fixed financial charges is called Trading on Equity.

Detailed explanation-3: -An equity share, normally known as ordinary share is a part ownership where each member is a fractional owner and initiates the maximum entrepreneurial liability related to a trading concern. These types of shareholders in any organization possess the right to vote.

Detailed explanation-4: -Trading on Equity Meaning-Trading on equity means using the borrowed capital to generate revenue that boosts the profits of equity shareholders, i.e., to make the profits by investing in the debt higher than the loan’s interest costs. Financial leverage also refers to trading on equity.

Detailed explanation-5: -Because we are considering how a company minimizes its overall cost of capital, the focus is on the market values of debt and equity. Therefore, capital structure is also affected by changes in the market value of a company’s securities over time.