BACHELOR OF BUSINESS ADMINISTRATION

BUSINESS ADMINISTRATION

BUSINESS MATHEMATICS

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
The advantage of participating preferred shares versus non-participating preferred shares is that participating preferred shares can:
A
obtain voting rights.
B
receive extra dividends
C
be converted into common stock
Explanation: 

Detailed explanation-1: -Thus, from an investor’s perspective, participating preferred stock is preferable to non-participating preferred stock as it allows for both a preferred payment upon liquidation and participation in the upside if the company is sold at a premium.

Detailed explanation-2: -Non-redeemable preference shares help companies by acting as a lifesaver during times of inflation. Participating preference shares help shareholders demand a part in the company’s surplus profit at the time of the company’s liquidation after the dividends have been paid to other shareholders.

Detailed explanation-3: -Advantages Of Preference Shares Preference shareholders enjoy preference over equity shareholders for dividend payments. Preference shareholders have the right to claim the company’s assets before equity shareholders in case of company liquidation, which makes it a less risky investment than equity.

Detailed explanation-4: -A participating policy enables you, as a policyholder, to share the profits of the insurance company. These profits are shared in the form of bonuses or dividends. It is also known as a with-profit policy. In non-participating policies, the profits are not shared and no dividends are paid to the policyholders.

Detailed explanation-5: -A non-participating preferred share, also known as non-participating preferred stock, is one in which a dividend is paid, usually at a fixed rate, and not determined by a company’s earnings. Holders of this type of share do not participate in the distribution of profits to equity investors.

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