A redeemable preference share is one that may be:
A) converted into debt at the option of the shareholder.
B) converted into cash at the option of either the company or the shareholder.
C) forgiven any future calls where the company has profits in excess of specified levels.
D) have any dividends converted into further preference shares rather than receiving them in cash.

Question

Quizplus · Accepted Answer

A redeemable preference share is a type of share that can be redeemed or repurchased by the company at a predetermined price, either at a fixed date in the future or at the option of the company or the shareholder. Therefore, option B is correct as it indicates that the shareholder can convert the share into cash at their option, or the company can do so at their option. Option A is incorrect as it refers to conversion into debt, while option C and D are not typical features of redeemable preference shares.

A Redeemable Preference Share Is One That May Be