Preference shares are often considered to be closer to debt as they:
A) may be issued with the condition that they are redeemable by the company in the future.
B) may guarantee a regular or cumulative payment, similar to interest.
C) may be able to be converted into ordinary shares at a specific date in the future, indicating they are a liability until that time.
D) may guarantee a regular or cumulative payment, similar to interest and may be able to be converted into ordinary shares at a specific date in the future, indicating they are a liability until that time.

Question

Quizplus · Accepted Answer

Preference shares are considered closer to debt because they often guarantee a regular or cumulative payment, similar to interest, which is a characteristic of debt instruments.

Preference Shares Are Often Considered to Be Closer to Debt