Question

Equity shareholders is____.

• A. Entitled to dividend at a fixed rate
• B. Not entitled to dividend at a fixed rate
• C. Entitled to dividend prior to payment of dividend to preference shareholder
• D. All of the above

Answer 1

The correct option is B Not entitled to dividend at a fixed rate

Equity shares will get dividend and repayment of capital after meeting the claims of preference shareholders. There will be no fixed rate of dividend to be paid to the equity shareholders and this rate may vary from year to year. This rate of dividend is determined by directors and in case of larger profits, it may even be more than the rate attached to preference shares. Such shareholders may go without any dividend if no profit is made.