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Question
Which of the following are the features of preference shares?
Options
Dividend at a fixed rate is payable on these shares before any dividend is paid on equity shares.
Preference shares carry voting rights.
They are a hybrid form of financing.
At the time of winding up the company, capital is repaid to equity shareholders prior to the return of preference capital.
Solution
Dividend at a fixed rate is payable on these shares before any dividend is paid on equity shares and they are a hybrid form of financing.
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RELATED QUESTIONS
What are Preference Shares?
Which of the following is also known as hybrid financing?
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.
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.
Preference shares carry preferential rights for payment of dividend and repayment of capital.
Dividends on cumulative preference shares go on accumulating unless paid.
Explain the disadvantages of preference shares.
