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Explain the Difference between Preference Shares and Equity shares?
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Equity Shares and Preference Shares. Equity shares are also known as Ordinary Shares. ... Preference shares have the right to receive dividend at a fixed rate before any dividend is paid on the equity shares. Further, when the company is wound up, they have a right to return of the capital before that of equity shares
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Preference shares :-
- The Nominal value is higher.
- There is no control over the management.
- Voting rights are limited.
- The risk is lower.
- It can be convert into Equity shares.
- They are paid in fixed rate.
Equity shares :-
- The Nominal value is generally lower.
- There is control over the management.
- Voting rights are not limited. They enjoy the voting rights.
- The risk is more as compared to Preference shares.
- It cannot be converted.
- It can be vary depending upon the profit & loss.
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