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Business Studies

Preference Shares

The term 'red...

Question

The term 'redeemable' is used for which of the following source of finance?

A

Equity shares

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B

Preference shares

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C

Retained earnings

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D

Loans

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Solution

The correct option is B
Preference shares

A company may issue this type of shares on the condition that the company will repay the amount of share capital to the holders of this category after a fixed period, or even earlier at the discretion of the company.

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Similar questions

The cheapest source of finance is

(a) debenture

(b) equity share capital

(c) preference share

(d) retained earning

The term 'redeemable' is used for

(a) Preference shares

(b) Commercial paper

(c) Equity shares

(d) Public deposits

Q. Redeemable Preference shares of Rs.

1, 00, 000

are redeemed at par for which fresh equity shares of Rs.

80, 000

are issued at discount of

10 %

. The amount transferred to capital Redemption Reserve will be _______.

Q. From the following details calculate the number of equity shares of Rs.

10

each to be issued in order to redeem the preference shares.

11 %

Redeemable preference shares of Rs.

10

=

150, 000

Security premium A/c

=

15, 000

General Reserve A/c

=

15, 000

Profit and loss A/c

=

35, 000

Redeemable preference shares are to be redeemed at

10 %

Q. Consider the following statements:
(1) Preference shares can be redeemed either out of profit of the company or out of the proceeds of fresh issue.
(2) Preference shares are redeemed after equity shares.
(3) Preference shareholders have preference right as to dividend as well as return of capital.
(4) A company cannot issue preference shares redeemable after 20 years.
The correct statements are ________________.

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