Advertisements
Advertisements
Question
Which of the following is also known as hybrid financing?
Options
Equity Shares
Preference shares
Debentures
Loans from commercial banks
Advertisements
Solution
Preference shares
Explanation:
Preference shares are hybrid securities because they combine equity and debt features. They pay fixed dividends like debentures yet stand between equity and debt (limited/no voting rights and preference in liquidation).
APPEARS IN
RELATED QUESTIONS
What are Preference Shares?
The term 'redeemable' is used for ______.
Preference shares may be ______.
Distinguish between equity shares and preference shares.
Describe the different types of preference shares.
Distinguish between cumulative and non-cumulative preference shares.
The directors of a company have decided to modernise the plants and machinery at an estimated cost of Rs. one crore, but could not decide whether to issue preference shares or debentures for this purpose. As finance manager of the company, advise the directors whether to issue preference shares or debentures in the interest of the company.
Preference shares carry preferential rights for payment of dividend and repayment of capital.
Discuss the importance of preference shares as sources of long-term finance.
Explain the disadvantages of preference shares.
