BUSINESS ADMINISTRATION
BUSINESS MATHEMATICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Participating preference shares entitle shareholders to:
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convert their shares into a specified number of common shares
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receive an additional dividend if the company’s profits exceed a pre determined level.
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Detailed explanation-1: -Besides extending dividends, participating preference shareholders are also entitled to surplus profits of the company. These shares do not entitle shareholders to any surplus profit but offer them the promised dividends. In the event of loss, a company is liable to pay the shareholders’ outstanding dividends.
Detailed explanation-2: -Participating preferred stock This gives preference shareholders fixed dividends, plus the possibility of extra dividends should the company achieve specific objectives or certain performance targets, such as company profits exceeding a specified level.
Detailed explanation-3: -Similarly, participating preferred shares offer the benefit of additional dividends if certain performance targets are reached, such as company profits exceeding a specified level.
Detailed explanation-4: -Preference shareholders have no right to participate in surplus profits unless the right to participate in surplus profits is expressly set out in the articles.