The rate of dividend on preference shares is generally _________ than the rate of interest on debentures.
A
lower
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B
higher
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C
equal
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D
medium
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Solution
The correct option is B higher
The capital raised by issue of preference shares is called preference share capital.Debentures are an important instrument for raising long term debt capital. A company can raise funds through issue of debentures, which bear a fixed rate of interest. The rate of dividend on preference shares is generally higher than the rate of interest on debentures.