1.

Distinguish between equity shares and preference shares.

Answer»
Basis of DifferenceEquity’ SharesPreference Shares
DefinitionShares who do not enjoy any preference as regards payment of dividend and repayment of capital.Shares which enjoy preference as regards payment of dividend and repayment of capital.
Why chosenVoting rights only possible with equity shares.With preference shares investors enjoy: Liquidation preference Conversion(1:1. 1:0.5. l:2)can be decided upon performance of the company.
Rate of DividendFluctuating, depending on the availability of profits and recommendations made by the Board of Directors.Fixed.
Payment of DividendNo priority.Enjoy priority.


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