Question

Mayank has surplus money of Rs. 25,00,000, which he wants to invest

either in equity shares or in preference shares. Two real estate

companies (Magic Estate and Skylark Enterprises), with almost the

same creditworthiness, are launching their public issue. Magic Estate is

coming up with a public issue of preference shares, while Skylark

Enterprises is coming up with equity shares. Mayank is confused about

the two issues. He consulted his friend Gaurav, who is a portfolio

manager and Gaurav convinced him to invest the money in Magic

Estate due to ‘Preferential Rights’ of preference shareholders over

equity shareholders.

State the ‘Preferential Rights’ stated by Gaurav, which convinced

Mayank to invest in Magic Estate.​

Answer 1

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