Which of the Following Is an Advantage of Preference Shares

question 54

Multiple Choice

Which of the following is an advantage of preference shares?

• A)Preference shareholders are guaranteed that they will not take a loss on their investment.
• B)Preference shareholders generally receive a fixed amount of dividends before ordinary shareholders do.
• C)Preference shareholders have higher voting rights than ordinary shareholders.
• D)Preference shareholders may sell their shares for a price higher than that of ordinary shares.

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Definitions:

Future Cash Receipts

Expected cash inflows associated with the future operations of a business, such as revenue from sales or collections on accounts receivable.

Investment Decision

The process of evaluating and selecting from different investment opportunities, often focusing on risk assessment, return expectations, and alignment with overall financial goals.

Return on Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated as the net profit of the investment divided by the cost of the investment.

Accounting Elements

Fundamental components used in financial reporting and analysis, including assets, liabilities, equity, revenues, expenses, and dividends.