What is equity share and preference share?

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Solution

Equity share is the share that is issued by the company for the general public, the equity shares are non-redeemable in nature.

Preference shares are special types of shares and the shareholders of such shares enjoy the luxury of payment of dividends before the equity shareholders.

A preference share is also known as preferred stock.

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What Are Equity Shares

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The term 'redeemable' is used for

(a) Preference shares

(b) Commercial paper

(d) Public deposits

The cheapest source of finance is

(a) debenture

(b) equity share capital

(d) retained earning

Differentiate between preference shares and equity shares.

Niyati wants higher and certain returns and also wants the safety of capital. What will she choose amongst the preference share and equity share ?

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