Preference shareholders are given a preference over ordinary shareholders in the payment of dividends and distribution of assets in the event of liquidation
They do not contain any voting rights
Dividends are not tax deductible
Preference stock payments are cumulative. If the dividends are not fully paid for a given period then they are carried forward to the next period. The past and present dividends have to be paid before any payments are paid to ordinary stock holders
Unpaid preference share dividends are not a liability to the firm hence the firm can suspend preference share payments
Preference shares can have adjustable rates according to the prevailing rate of interest
Preference shares may be callable or redeemable. They also be convertible to ordinary shares at a fixed ratio
Dana05 answered the question on July 18, 2019 at 19:27
- Highlight the characteristics of common shares (Solved)
Highlight the characteristics of common shares
Date posted: July 18, 2019. Answers (1)
- What is the function of brokers and dealers in the secondary market (Solved)
What is the function of brokers and dealers in the secondary market
Date posted: July 18, 2019. Answers (1)
- What is the importance of contractual covenants to money lenders?(Solved)
What is the importance of contractual covenants to money lenders?
Date posted: July 18, 2019. Answers (1)
- Differentiate between the primary and the secondary markets in the issuance of shares (Solved)
Differentiate between the primary and the secondary markets in the issuance of shares
Date posted: July 18, 2019. Answers (1)
- Distinguish between equity and debt (Solved)
Distinguish between equity and debt
Date posted: July 18, 2019. Answers (1)
- Discuss contingent financial instruments and give an example (Solved)
Discuss contingent financial instruments and give an example
Date posted: July 18, 2019. Answers (1)
- What are the specifications of a negative covenant?(Solved)
What are the specifications of a negative covenant?
Date posted: July 15, 2019. Answers (1)
- A positive covenant specifies what a borrower must do while a negative covenant specifies what a borrower must not do
(Solved)
A positive covenant specifies what a borrower must do while a negative covenant specifies what a borrower must not do
Date posted: July 15, 2019. Answers (1)
- What are the specifications of a positive covenant?(Solved)
What are the specifications of a positive covenant?
Date posted: July 15, 2019. Answers (1)
- What is a contractual covenant?(Solved)
What is a contractual covenant?
Date posted: July 15, 2019. Answers (1)
- What are the items included in the long term loan agreements?(Solved)
What are the items included in the long term loan agreements?
Date posted: July 15, 2019. Answers (1)
- A bond has a market price of 500 shillings. It promises to a coupon payment of 15% per annum at the end of each year...(Solved)
A bond has a market price of 500 shillings. It promises to a coupon payment of 15% per annum at the end of each year for two years. If the face value of the bond is 1000. Find the current yield to maturity
Date posted: July 15, 2019. Answers (1)
- What is the meaning of yield to maturity?(Solved)
What is the meaning of yield to maturity?
Date posted: July 15, 2019. Answers (1)
- What is bond valuation?(Solved)
What is bond valuation?
Date posted: July 15, 2019. Answers (1)
- Give the definition of fixed income securities (Solved)
Give the definition of fixed income securities
Date posted: July 15, 2019. Answers (1)
- State the three main participants in the derivatives market (Solved)
State the three main participants in the derivatives market
Date posted: July 15, 2019. Answers (1)
- Briefly explain the factors affecting option prices (Solved)
Briefly explain the factors affecting option prices
Date posted: July 15, 2019. Answers (1)
- Briefly discuss the features of options (Solved)
Briefly discuss the features of options
Date posted: July 15, 2019. Answers (1)
- What are the problems that are associated with marking to the markets?(Solved)
What are the problems that are associated with marking to the markets?
Date posted: July 15, 2019. Answers (1)
- Distinguish between forwards contract and futures contract (Solved)
Distinguish between forwards contract and futures contract
Date posted: July 15, 2019. Answers (1)