Question

State three differences between ordinary shares and preference shares.

Answer 1

Answer:

Both ordinary and preference shares illustrate a claim in the corporate earnings and assets. Dividends for ordinary shares may be irregular and indefinite, whereas preference shareholders will receive a fixed dividend which will accrue usually if the payments are not made in one term.

Answer 2

Answer:

1.preference share holders can activate their cash back if the entity is liquidating

2.preference shareholders are being paid before any shareholder

3.preference shareholder has the lien to sell its share

Explanation: