What are preference shares? Explain types of preference shares.
Understand the Problem
The question is asking to explain what preference shares are, along with detailing different types of preference shares. It seeks a clear definition and description of their characteristics and functionalities.
Answer
Preference shares have rights to dividends before common stocks. Types: cumulative, non-cumulative, participating, convertible.
Preference shares, or preferred stock, are equity securities with preferential rights to dividends before common stocks. Types include cumulative, non-cumulative, participating, and convertible shares.
Answer for screen readers
Preference shares, or preferred stock, are equity securities with preferential rights to dividends before common stocks. Types include cumulative, non-cumulative, participating, and convertible shares.
More Information
Preference shares offer a stable income with less risk compared to common shares. They often suit investors seeking regular dividends.
Tips
Confusing cumulative with non-cumulative shares is common; remember, cumulative shares accumulate unpaid dividends.
Sources
- What are Preference Shares: Meaning, Types, And Features | 5paisa - 5paisa.com
- Preference Shares: Meaning, Types And Features - nirmalbang.com
- Types of preference shares - AccountingTools - accountingtools.com
