Question

Difference between valuation of equity shares and valuation of preference shares

Answer 1

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Key difference is that while Preference shareholders enjoy the benefit of receiving their dividend distribution first; the equity shareholders enjoy voting rights in major company decisions, including mergers or acquisitions. ... Equity Shares and Preference Shares. Equity shares are also known as Ordinary Shares.

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Answer 2

Answer: The difference between valuation of equity shares and valuation of preference shares are :

Explanation:

1) Preference shares have high nominal value where is equity shares have low nominal value.

2) Preference shares are paid before equity shares where as equity shares are paid after preference shares.

3) Preference shares are redeemable during the lifetime of the company where as equity shares are non redeemable during the lifetime of the company.

4) The rate of dividend of preference share is generally fixed whereas the rate of dividend of equity share varies with the companies profit.

5) The valuation of preference share remains constant whereas the valuation of equity shares vary from time to time and depends upon the market.