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Question
What are Preference Shares?
Solution
Preference shares are a type of share that combines the features of both equity shares and debentures bonds.
Some key characteristics of preference shares are:
- Preference shares receive priority dividend payments.
- They are given dividends at a defined rate from profits. Priority in repayment upon liquidation of the company.
- Preference shares might be convertible, non-convertible, redeemable, or non-redeemable.
- Preference shares are regarded as an investment option by cautioned investors due to their minimal risk.
RELATED QUESTIONS
The term 'redeemable' is used for ______.
Which of the following is also known as hybrid financing?
Which of the following are the features of preference shares?
Preference shares may be ______.
Distinguish between equity shares and preference shares.
Describe the different types of preference shares.
Distinguish between cumulative and non-cumulative preference shares.
Preference shares carry preferential rights for payment of dividend and repayment of capital.
Discuss the importance of preference shares as sources of long-term finance.
Explain the disadvantages of preference shares.
