Preference Shares Quiz

What are preference shares?

• Preference shares are shares that give shareholders the same rights as common shares.

• Preference shares are shares that give shareholders voting rights.

• Preference shares are shares that give shareholders certain preferential rights.

• Preference shares are shares that give shareholders no rights.

What is the main difference between preference shares and equity shares?

• Preference shares have a higher voting rights than equity shares.

• Preference shares have a lower priority in payment of dividends than equity shares.

• Equity shares have a fixed dividend rate and priority in payment of dividends and return of capital.

• Preference shares have a fixed dividend rate and priority in payment of dividends and return of capital, while equity shares do not have a fixed dividend rate and have residual claim on the company's assets and earnings.

Preference shares are also known as?

• Equity shares

• Preferred shares

• Common shares

• Ordinary shares

Which type of shareholders have a higher claim on the company's assets and earnings?

• Preferred shareholders

• Common shareholders

• Creditors

• Bondholders

Do preference shareholders have voting rights?

• Sometimes

• Yes

• No

• Only in certain circumstances

What is the fixed dividend rate associated with preference shares?

• Negotiable rate

• Predetermined percentage

• Variable rate

• No dividend

Can preference shareholders convert their shares into equity shares?

• No

• Yes

• Only if approved by the board of directors

• Only if the company is profitable

What is the priority of preference shareholders in case of liquidation?

• Preference shareholders have a lower priority than common shareholders in case of liquidation.

• Preference shareholders have the same priority as common shareholders in case of liquidation.

• Preference shareholders have no priority in case of liquidation.

• Preference shareholders have a higher priority than common shareholders in case of liquidation.

Are preference shareholders entitled to receive dividends before equity shareholders?

• Only if they have more shares

• Sometimes

• No

• Yes

What is the main advantage of preference shares for investors?

• Voting rights in company decisions

• Lower risk compared to common shares

• Guaranteed fixed dividend payments

• Higher claim on assets and earnings