Question : A preference share that carry the right of sharing surplus profits is called _______.
Option 1: Non cumulative preference shares
Option 2: Cumulative preference shares
Option 3: Participating preference shares
Option 4: Non participating preference shares
Correct Answer: Participating preference shares
Solution : Answer = Participating preference shares
Participating preference shares are such shares, in addition to the fixed preference dividend, that carry a right to participate in the surplus profits, if any after a dividend at a stipulated rate has been paid to equity shareholders. Hence, the correct option is 3.
Question : Which type of preference share does not carry the right to receive the arrears of dividends from future profits?
Option 1: Cumulative preference shares
Option 2: Non – cumulative preference shares
Option 3: Non participating preference shares
Option 4: None of theses
Question : Preference shares, in case the holders of these have the right to convert their preference shares into equity shares at their option according to the terms of issue, such shares are called _______.
Option 1: Cumulative preference share
Option 2: Non Cumulative preference shares
Option 3: Convertible preference shares
Option 4: Non-convertible preference shares
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