Preference shares have characteristics similar to bonds because it ______________ A. has a fixed monthly rate. B. has a fixed dividend amount. C. represents the ownership of the company. D. has no fixed dividend amount.

Preference shares have characteristics similar to bonds because it ______________ A. has a fixed monthly rate. B. has a fixed dividend amount. C. represents the ownership of the company. D. has no fixed dividend amount.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 12QTD

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Question

Preference shares have characteristics similar to bonds because it ______________

A. has a fixed monthly rate.

B. has a fixed dividend amount.

C. represents the ownership of the company.

D. has no fixed dividend amount.

Definition Definition Type of stock which is granted priority over dividend distributions as compared to common stockholders. Preferred stocks also do not carry any voting rights. Notably, in a case where a company is going to be liquidated, preferred stockholders have a priority claim on the value of assets of the company as quoted in the balance sheet, as compared to the common stockholders.

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