Question

______ holders do not receive a fixed amount of dividend, whereas ______ holders receive a fixed amount dividend.

Options

• Equity share; preference share

• Preference share; equity share

• Debenture; equity shares

• Preference shares; debenture

Answer 1

Equity share holders do not receive a fixed amount of dividend, whereas preference share holders receive a fixed amount dividend.

Explanation:

• Equity shareholders are the real owners of the company, and they do not receive a fixed dividend. Their dividend depends on the company’s profitability and the discretion of the board.
• Preference shareholders, on the other hand, are entitled to a fixed rate of dividend, which is paid before any dividend is distributed to equity shareholders.