Question : A preference share that carry the right of sharing surplus profits is called _______.
Option 1: Non cumulative preference shares
Option 2: Cumulative preference shares
Option 3: Participating preference shares
Option 4: Non participating preference shares
Answer (1)
25th Jan, 2024
Correct Answer: Participating preference shares
Solution : Answer = Participating preference shares
Participating preference shares are such shares, in addition to the fixed preference dividend, that carry a right to participate in the surplus profits, if any after a dividend at a stipulated rate has been paid to equity shareholders. Hence, the correct option is 3.
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