Question

Peter owns 100 shares of a company. He receives a fixed rate of dividend from these shares. Which type of share has Peter purchased?
A. equity shares
B. preference shares
C. ordinary shares
D. priority shares
E. investment security

Answer 1

Answer:

B. preference shares

Explanation:

Preference shares are issued by corporate to raise additional capital. They are considered hybrid securities because they combine elements of debts and equity. Preference shareholders have a priority claim in dividends over ordinary shares. They enjoy fixed dividends payments but have no voting rights.