Question

A preference share which carry the right of participating in the surplus left after paying equity dividend is called.

• A. Convertible preference share
• B. Cumulative preference shares
• C. Participating preference shares
• D. All of the above

Answer 1

The correct option is C Participating preference shares

The preference shares carry only the right to return of capital but a participating preference share has the right of gaining the surplus which is left after the distribution of dividend to equity shareholders.

Thus when a company issues such type of shares, they provide benefit to people with access to mote of dividend.