Which of the following is an advantage of preference shares?
A)In the event of liquidation,preference shareholders may sell their shares for higher amounts than ordinary shares.
B)In the event of liquidation,preference shareholders may retain their proportionate share of voting rights.
C)In the event of liquidation,preference shareholders are guaranteed to get their investment back in full.
D)In the event of liquidation,preference shareholders have first claim on remaining company assets.

Question

Quizplus · Accepted Answer

The advantage of preference shares is that in the event of liquidation, preference shareholders have first claim on remaining company assets, which means they will have a higher chance of receiving their investment back compared to ordinary shareholders. Option A is not necessarily true, as the amount an investor can sell their shares for depends on the market demand and supply. Option B is not true, as preference shareholders usually do not have voting rights, or if they have, they are limited. Option C is also not necessarily true, as the amount a preference shareholder can receive in liquidation depends on the number of claims from other preference shareholders and creditors.

Which of the Following Is an Advantage of Preference Shares