WAEC Commerce 1999 Theory question 101

Any five, explained: ordinary shares (equities) – owners of the company, vote at meetings, dividend varies with profit and is paid last, bear the greatest risk, repaid last on winding up; preference shares – fixed rate of dividend paid before ordinary shares, usually no voting rights, priority in repayment of capital; cumulative preference shares – unpaid dividends in a bad year are carried forward and paid later; non-cumulative preference shares – a missed dividend is lost; participating preference shares – fixed dividend plus a further share of profit after ordinary shareholders receive a stated amount; redeemable preference shares – can be bought back by the company at a fixed date or at its option; deferred/founders' shares – held by founders, receive dividend only after all other shareholders have been paid.

Explain how each class differs in dividend, voting and risk.