What is share discuss features of any two type of preference shares?
Answers
Shares are basically units of representing an equal proportion of interest in a company's capital. This enables the shareholder to get equal claim on the company's profits and also equal claim on the losses. The division of profits is based on the number of shares the shareholder is possessing.
There are 2 types of shares:
1. Ordinary share
2. preference shares
Preference shares:
Preference shares entitle the shareholder to a fixed interest but generally do not give him or her voting rights. There are many types of preference shares so we will be discussing convertible and non convertible preference shares as well as adjustable rate preference shares.
Convertible and non-convertible preference shares:
The convertible preference shares possess the quality that they can be converted into ordinary shares on agreed terms and conditions. On the other hand non-convertible shares cannot be converted into ordinary shares but they possess all other characteristics of preference shares.
Adjustable rate preference shares:
These are the type of preference shares where there no no fixed dividend rate therefore it is formulated based on calculations related to current interest rates.