question_answer

What are the preferences given to preference shareholders?

Answer:

Ans.     (a) They get dividend at a fixed rate and dividend is given on these shares before any dividend on equity shares.

(b) When company winds up, preference shares are paid before equity shares.

(c) Preference shares also have a right to participate in excess profits left after payment being made to equity shares.

(d) They also have a right to participate in the premium at the time of redemption.