Preference Shares Are Often Issued

question 119

Multiple Choice

Preference shares are often issued:

• A) To initiate or increase financial leverage.
• B) To raise capital without sacrificing control.
• C) To appeal to investors who believe that ordinary shares are too risky.
• D) To boost the return earned by ordinary shareholders.
• E) All of these.

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Definitions:

SBA

Refers to the Small Business Administration, a U.S. government agency that provides support to entrepreneurs and small businesses.

Venture Capital Firms

Investment companies that provide funding to start-up companies and small businesses with perceived long-term growth potential.

High-tech Industries

Sectors that are heavily involved in the development and production of technology, including computing, telecommunications, and biotechnology.

Double-Entry Accounting

An accounting system in which every business transaction is recorded in an asset account and a liability or owner’s equity account so that the system will balance.