Question

Preference shares which are entitled to surplus profits of the company in addition to their share of fixed dividend are called as ______.

Options

• Cumulative preference shares

• Participating preference shares

• Registered preference shares

• Convertible preference shares

Answer 1

Preference shares which are entitled to surplus profits of the company in addition to their share of fixed dividend are called as participating preference shares.

Explanation:

Participating preference shares are entitled to a fixed dividend and, in addition, a share in the surplus profits of the company after dividends have been paid to equity shareholders.