Question

what is preference share? state it's two types​

Answer 1

$\huge\mathfrak\purple{Answer}$

Preferred shares are a hybrid form of equity that includes debt-like features such as a guaranteed dividend. The four main types of preference shares are callable shares, convertible shares, cumulative shares, and participatory shares.

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Answer 2

Preference shares are shares in the equity of a company that entitle the holder to a fixed dividend amount to be paid by the issuer.

The types of preference shares are:

1. Cumulative preference shares

These shares come with a provision that entitles shareholders to receive dividends in arrears.

2. Irredeemable preference shares

This particular share cannot be redeemed or repaid during the active lifetime of a company.

3. Redeemable preference shares

These preference shares are also known as callable preferred stock and serve as one of the most effective ways to finance big companies.

4. Non-cumulative preference shares

These shares do not accumulate dividends. It is mostly because non-cumulative preference shareholders are paid from the current year’s net profits.

5. Participating preference shares

The said shares extend the right to partake in surplus profit during liquidation once the company in question has paid its other shareholders.