Preference Shares Are Often Considered to Be Closer to Debt

question 32

Multiple Choice

Preference shares are often considered to be closer to debt as they:

• A) May be issued with the condition that they are redeemable by the company in the future.
• B) May guarantee a regular or cumulative payment, similar to interest.
• C) May be able to be converted into ordinary shares at a specific date in the future, indicating they are a liability until that time.
• D) May guarantee a regular or cumulative payment, similar to interest and may be able to be converted into ordinary shares at a specific date in the future, indicating they are a liability until that time.
• E) May be issued with the condition that they are redeemable by the company in the future and may guarantee a regular or cumulative payment, similar to interest.

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Definitions:

Human Capital

The economic value of a worker's experience and skills, including factors like education and training.

Compensating Differentials

Wage differentials that compensate workers for job attributes, such as unpleasant conditions or risks, maintaining equilibrium across labor markets.

Wage Disparity

Wage disparity refers to the differences in wages earned by different groups of people, often influenced by factors such as gender, ethnicity, education, and job type.

Compensating Differentials

Wage differences across jobs that reflect the desirability of the job attributes, compensating workers for non-monetary aspects of different jobs like risk or undesirable hours.