Question

What Is Meant by a ‘share’ ? Give Any Two Differences Between ‘preference Shares’ and ‘equity Shares’.

Answer 1

Share refers to the units in which the total share capital of a company is distributed. Therefore a share forms a part of the share capital and it forms the basis for ownership rights in a company.

The differences between preference shares and equity shares are as follows:

1. Preference shares provide a fixed dividend to the shareholder while equity shares provide dividends based on the profit and loss of the company.
2. Preference shares can be redeemed while equity shares are not redeemable.

Also read:

• Preference Shares
• What Are Equity Shares
• Interest on Debentures

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