Question

Preference shares are a hybrid security comprising features of both ______ and ______.

Answer 1

Preference shares are a hybrid security comprising features of both equity shares and debentures.

Explanation:

Preference shares are called hybrid securities because they combine features of both equity shares (ownership in the company) and debentures (fixed rate of return). Preference shareholders get a fixed dividend like debenture holders, but they are also part-owners of the company.