Question

Preference shares are a hybrid form of financing because ______.

विकल्प

• Preference shares have the characteristics of both equity shares and overdraft.

• Preference shares have the characteristics of both loan and debentures.

• Preference shares have the characteristics of both equity shares and debentures.

• Preference shares have the characteristics of both equity shares and cash credit.

Answer 1

Preference shares are a hybrid form of financing because preference shares have the characteristics of both equity shares and debentures.

Explanation:

Preference shares are hybrid because they combine equity traits (dividends paid from profits; limited/no voting) with debt traits (fixed-rate dividend and priority in repayment), so they share characteristics of both equity shares and debentures.