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Questions and Answers
Which type of investment represents a debt owed by the company and usually pays a fixed rate of interest?
Which type of investment represents a debt owed by the company and usually pays a fixed rate of interest?
What type of shares typically receive a fixed dividend and have priority over ordinary shares in the distribution of profits?
What type of shares typically receive a fixed dividend and have priority over ordinary shares in the distribution of profits?
Which type of shares entitle the holders to voting rights in the company's decisions?
Which type of shares entitle the holders to voting rights in the company's decisions?
Which type of shares have a feature that allows any unpaid dividends to accumulate and must be paid before dividends are paid to other types of shares?
Which type of shares have a feature that allows any unpaid dividends to accumulate and must be paid before dividends are paid to other types of shares?
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What is the primary purpose of issuing shares?
What is the primary purpose of issuing shares?
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What is a key feature of issuing debentures?
What is a key feature of issuing debentures?
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What distinguishes the issue of shares from the issue of debentures?
What distinguishes the issue of shares from the issue of debentures?
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Study Notes
Investments and Shares
- Debentures represent a debt owed by the company and usually pay a fixed rate of interest.
- Preference shares typically receive a fixed dividend and have priority over ordinary shares in the distribution of profits.
- Ordinary shares entitle the holders to voting rights in the company's decisions.
- Cumulative preference shares have a feature that allows any unpaid dividends to accumulate and must be paid before dividends are paid to other types of shares.
Purpose of Issuing Shares
- The primary purpose of issuing shares is to raise capital for the company.
Debentures vs. Shares
- A key feature of issuing debentures is that they represent a debt obligation, whereas shares represent ownership.
- The issue of shares is distinguished from the issue of debentures in that shares represent ownership, while debentures represent a debt obligation.
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Description
Test your knowledge about preference shares and debentures with this quiz. Identify the features and characteristics of these types of investments.
