When a Company Redeems Preference Shares

question 17

Multiple Choice

When a company redeems preference shares:

• A) It must ensure it has sufficient cash reserves to do so.
• B) It must do so out of profits other than those available for the issuing of dividends.
• C) It must issue fresh shares to fund the redemption.
• D) None of the given answers are correct.

---

Definitions:

Ethanol

An organic compound, also known as alcohol, with the formula C2H5OH, widely used as a solvent, in the manufacture of various goods, and as a renewable fuel.

Hexane

A hydrocarbon compound with six carbon atoms and 14 hydrogen atoms, often used as a non-polar solvent.

Polarity

The property of having distinct and opposite charges or magnetic poles, leading to a molecule having regions with slightly positive and slightly negative charges.

Benzene

A colorless, volatile liquid hydrocarbon with a distinctive sweet smell, C6H6, used as a solvent and in the manufacture of various chemicals.