Which Statement Regarding Preference Shares Is Correct

question 45

Multiple Choice

Which statement regarding preference shares is correct?

• A)Preference shares typically carry voting rights.
• B)Preference shares continue to be a major source of new finance for companies.
• C)Preference shareholders do not have the right to receive dividends prior to dividends being paid to ordinary shareholders.
• D)Dividends paid on preference shares are not normally tax deductible to the business.

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Definitions:

Common Stock

A type of security that represents ownership in a corporation, with holders usually having voting rights and potentially receiving dividends.

Statement of Cash Flows

A financial report that shows how changes in balance sheet and income accounts affected cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

Dividends

Disbursements by a company to its stockholders, often as a profit-sharing mechanism.

Obligations

Legal or financial duties that one party is bound to perform for another, such as the repayment of a loan.