BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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preferential right to receive dividend
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the rate of dividend is fixed
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have voting rights
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rate of dividend is variable
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Detailed explanation-1: -Owners of preference shares receive fixed dividends, well before common shareholders see any money. In either case, dividends are only paid if the company turns a profit.
Detailed explanation-2: -Preference shares are issued to the shareholders with a fixed rate of dividend.
Detailed explanation-3: -The preferential dividend payable on preference shares is often specified to be a fixed percentage of the nominal value (and any premium) paid up on the preference shares, for example, “6% preference shares". In such cases, the dividend is fixed unless otherwise stated in the preference share rights.
Detailed explanation-4: -Preference shares are usually fixed-income shares that do not participate in the success of the company. Consequently, they are considered to be a less risky form of investment than ordinary shares.