Unlike bonds, preference shares [blank].

Question

Quizplus · Accepted Answer

Preference shares do not have a fixed maturity date, making them perpetual securities, unlike bonds which have a fixed maturity date. Option A is incorrect because preference shares may or may not pay large dividends as it depends on the terms of the issuance. Option C is incorrect because preference shares may have multiple types, such as cumulative preference shares, non-cumulative preference shares, participating preference shares, non-participating preference shares, etc. Option D is incorrect because preference shares are also affected by the level of interest rates in the market, and their fixed dividend rate is based on the company's ability to pay and the prevailing market conditions.

Unlike Bonds, Preference Shares [Blank]