Preference shares typically offer: A. Voting rights to shareholders B. Fixed dividend payments C. Convertibility into equity shares D. No claim on company profits
Question
Preference shares typically offer: A. Voting rights to shareholders B. Fixed dividend payments C. Convertibility into equity shares D. No claim on company profits
Solution
Preference shares typically offer:
B. Fixed dividend payments: Preference shares often come with a fixed dividend rate. This means that shareholders will receive a certain amount of money each year, regardless of how well the company is doing. This is different from common shares, where dividends can fluctuate based on the company's performance.
C. Convertibility into equity shares: Some preference shares come with the option to convert them into common shares. This can be beneficial for the shareholder if the price of the common shares increases.
D. No claim on company profits: While preference shareholders do receive dividends, they do not have a claim on the company's profits. This means that they do not benefit directly from the company's success beyond their fixed dividends.
A. Voting rights to shareholders: This is typically not a feature of preference shares. Voting rights are usually reserved for common shareholders. However, some preference shares may come with voting rights, but this is less common.
Similar Questions
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