Which Three of the Following Statements Correctly Apply to Preference

question 8

Multiple Choice

Which three of the following statements correctly apply to preference shares?

• A) Preference shares usually carry voting rights.
• B) When compared with bonds, they offer a higher rate of return but at higher risk to the investor.
• C) The dividend on them is paid before anything is paid out to ordinary shareholders.
• D) They usually offer their owners a fixed rate of dividend each year.

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Definitions:

Mutually Exclusive

Mutually exclusive refers to events in probability and statistics that cannot occur at the same time, indicating that the occurrence of one event necessarily excludes the occurrence of the other.

Collectively Exhaustive

A set of events is collectively exhaustive if at least one of the events must occur.

Probability

A measure of the likelihood that an event will occur, expressed on a scale from 0 (impossibility) to 1 (certainty).

Random Experiment

An experimental process that leads to well-defined but unpredictable outcomes.