A preference share is preferred because:
A) it has a higher claim on dividends and assets than ordinary shares.
B) it is preferred by shareholders as a potentially better investment.
C) preferred shareholders have more voting rights than ordinary shareholders.
D) it has a higher claim on assets in liquidation than liabilities do.

Question

Quizplus · Accepted Answer

Preference shares have a higher claim on dividends and assets compared to ordinary shares. This means that in case a company experiences financial difficulties or has to liquidate, preference shareholders get priority over ordinary shareholders in receiving their dividend payments and getting their share of the company's assets.

A Preference Share Is Preferred Because