A firm's founder sells equity to outside investors for the first time in the form of preference shares. In what way are their preference shares most likely to differ from the preference shares issued by an established public firm?

Question

Quizplus · Accepted Answer

Preference shares issued by a startup or a firm's founder for the first time to outside investors are less likely to pay cash dividends compared to those issued by an established public firm. Startups often reinvest profits to fuel growth rather than distribute them as dividends.

A Firm's Founder Sells Equity to Outside Investors for the First