Answer:
Equity Shares are commonly called Common shares and have both advantages and disadvantages over Preference shares.
- Equity shareholders are allowed to vote on company issues while preference shareholders can not.
- Preference shareholders get paid first between the two in the case that the company liquidates from bankruptcy.
- Preference shareholders get a fixed dividend that has to be paid before equity share dividends are paid.
- Preference shareholders can convert their shares to Equity shares but equity shareholders do not have the same courtesy.
- Preference shares can only be sold back to the company while equity shares can be sold to anybody.
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