Question

The preference shares for which the company has no obligation to pay back the principal amount of the shares during its lifetime is called as which preference share

Answer 1

Answer:

Explanation:

Preference shares are quasi equity instruments where the holder or investor is entitled to dividends before profits are distributed to common shareholders. ... It is also an ideal way for you to benefit from a company's growth but at a risk lower than what common equity shares hold

Answer 2

In Irredeemable preference shares, the ‘company has no obligation’ to pay back the ‘principal amount of the shares’ during its lifetime.  

EXPLANATION:

There is no maturity date for these shares. The dividend is fixed for these shares and the company needs to pay the annual dividends which is the liability it needs to follow.  

This can be shown with the help of a formula:

$\bold{\text { cost of the share }=\frac{\text { Annual dividend of preference shares }}{\text { The market price of the preference stock }}}$