Question

The following statements apply to equity/preference shareholders. Which one of them applies only to preference shareholders?

Options

• Shareholders risk the loss of investment

• Shareholders bear the risk of no dividends in the event of losses

• Shareholders usually have the right to vote

• Dividends are usually given at a set amount in every financial year

Answer 1

Dividends are usually given at a set amount in every financial year

Explanation:

Preference shareholders are entitled to a fixed rate of dividend, which is typically pre-determined at the time of issue. This is unlike equity shareholders, whose dividend varies based on company profits and board decisions.