WAEC Commerce 1993 Question 18

Question 18

Business Finance

Preference shareholders are different from ordinary shareholders because

  1. A.preference shareholders are creditors to the company
  2. B.the number of shares held by preference shareholders is more
  3. C.preference shareholders take a fixed percentage of dividends
  4. D.the shares of preference shareholders cannot be sold on the stock exchange
  5. E.preference shareholders receive interest.
Show the answer and explanation

Answer: C (preference shareholders take a fixed percentage of dividends)

Explanation

Preference shares earn a fixed rate of dividend, while ordinary dividends vary with profit.