What are preference shares? Explain types of preference shares.
Understand the Problem
The question is asking for an explanation of preference shares and their types. It is looking for definitions and characteristics of cumulative and non-cumulative preference shares.
Answer
Preference shares have priority dividends; types: cumulative, non-cumulative, convertible, participating.
Preference shares are company stock with dividends paid before common stock dividends. Types include cumulative, non-cumulative, convertible, and participating preference shares.
Answer for screen readers
Preference shares are company stock with dividends paid before common stock dividends. Types include cumulative, non-cumulative, convertible, and participating preference shares.
More Information
Preference shares offer a set dividend rate and prior claim over common shares in a company's earnings and asset distribution. Types vary based on the rights and conditions of dividend payments and convertibility into common stock.
Tips
Common mistakes include confusing preference shares with common shares or not understanding the dividend accumulation in cumulative shares.
Sources
- What Are the Different Types of Preference Shares? - Investopedia - investopedia.com
- Preference Shares: Meaning, Types And Features - nirmalbang.com
- Types of Preference Shares in India - Groww - groww.in
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