Question

A preference share holder get interest at a fixed rate. (True/False)

Answer 1

Answer:

true

because there interest is fixed

Answer 2

Answer:

True.

Explanation:

• Preferred dividends are cash dividends paid by a company to its preferred shareholders.
• Preference share holders get dividend at pre defined fixed rate and receive them in case of profits of the company.
• One advantage of preferred stock is that it typically pays higher dividend rates than common stock.
• A company declares all of its future preferred dividend obligations in advance, and as a result, funds must be allocated for that purpose where they accumulate in arrears.
• Prior to considering any common share dividend, preferred dividends must be paid out of net income.

Hence, we can conclude that a preference share holder gets interest at a fixed rate before any dividend is paid to the equity share holder.

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