Preference Shares

question 59

Multiple Choice

Preference shares:

• A) have their dividend fixed at the issue date.
• B) rank behind ordinary shares in the payment of dividends.
• C) rank behind ordinary shareholders in their claim on company assets in the event of liquidation.
• D) rank ahead of the company creditors.

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Definitions:

Book Value

The value of a company or asset as it appears on the balance sheet, calculated by subtracting liabilities from assets.

Fair Value

Fair value is the estimated price at which an asset could be bought or sold in a current transaction between willing parties, apart from in a liquidation sale.

Depreciable Assets

assets that lose value over time due to wear and tear, deterioration, or obsolescence, which businesses can write off as an expense over the asset's useful life.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts.