Question 25
Business OrganisationsIn a joint stock company, preference shareholders are those who receive
- A.high dividends when profits are high and little or nothing when profits are low
- B.a fixed rate of dividend and have the first claim on the net profits of the company
- C.the remaining profits after all other shareholders have been paid
- D.dividends quarterly when others receive annually.
Show the answer and explanation
Answer: B (a fixed rate of dividend and have the first claim on the net profits of the company)
Explanation
Preference shares carry a fixed rate of dividend, paid before ordinary shareholders receive anything.