Question : Preference shares are referred to as such if the holder has the opportunity, within the terms of the issuance, to convert their prefrence shares into equity shares are called-
Option 1: Cumulative Preference share
Option 2: Convertible Preference share
Option 3: Non Convertible Preference share
Option 4: Non Cumulative Preference share
Correct Answer: Convertible Preference share
Solution : A preference share issued with the provision that it may be converted into a specified number of common shares or cash at a specific moment or when a specific occurrence occurs is called a Convertible preference share. A company can issue convertible preference shares which may be converted into equity shares of the company or at the option of shareholders may be redeemed the maturity.
Hence the correct answer is option 2.
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
Question : The share on which there is no pre-fixed rate of dividend is decided, but the rate of dividend fluctuates every year according to the availability of profits such shares are called ________.
Option 1: Equity shares
Option 2: Non – cumulative preference shares
Option 3: Non – convertible preference shares
Option 4: Non – Guaranteed preference shares
Question : Unless otherwise stated, a prefrence share is always deemed to be:
Option 1: Cumulative, Participating and Non Convertible
Option 2: Non-Cumulative, Non-Participating and Non-Convertible
Option 3: Cumulative, Non-Participating and Non-Convertible
Option 4: Non-Cumulative, Participating and Non-Convertible
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