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Question
The term 'redeemable' is used for ______.
Options
Preference shares
Debentures
Equity shares
Public deposits
Solution
The term 'redeemable' is used for preference shares.
Explanation:
These preference shares can be refunded either on the expiry of the specified period or at the company's option. The Companies Act requires preference shares to be repayable within 20 years from the date of issue.
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Preference shares may be ______.
Distinguish between equity shares and preference shares.
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The directors of a company have decided to modernise the plants and machinery at an estimated cost of Rs. one crore, but could not decide whether to issue preference shares or debentures for this purpose. As finance manager of the company, advise the directors whether to issue preference shares or debentures in the interest of the company.
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Dividends on cumulative preference shares go on accumulating unless paid.
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