Get premium membership and access questions with answers, video lessons as well as revision papers.

Identify six ways in which a company could make preference shares more attractive to a potential investor.

      

Identify six ways in which a company could make preference shares more attractive to a
potential investor.

  

Answers


Martin
The shares could be made more attractive in the following ways:
-The shares could be 'convertible preference shares', allowing the holders to
have a chance to convert it into equity shares.

- The shares could be cumulative so that dividends cannot be paid any one year, the
preference shareholder will still have the possibility of receiving previous periods dividends
when funds are available.
The company could offer a high rate of dividends on the shares a rate well above the
interest yield on fixed interest securities.
-The preference shares could be made redeemable.
- The preference shares could be of the participating kind, entitling the holder to participate
in further share of the profits after they have received their fixed percentage
-Dividends rate.

marto answered the question on February 11, 2019 at 11:17


Next: What are the determinants of the price of a bond?
Previous: List and briefly discuss three possible reasons why companies in the same type of business may have different price/earnings (P/E) ratios.

View More CPA Financial Management Questions and Answers | Return to Questions Index


Learn High School English on YouTube

Related Questions