Question : Preference shares, in case the holders of these have the right to convert their preference shares into equity shares at their option according to the terms of issue, such shares are called _______.
Option 1: Cumulative preference share
Option 2: Non Cumulative preference shares
Option 3: Convertible preference shares
Option 4: Non-convertible preference shares
Correct Answer: Convertible preference shares
Solution : Answer = Convertible preference shares
Preference shares that allow holders to convert them into equity shares according to predetermined terms are known as convertible preference shares . These shares offer the option for investors to convert their preference shares into equity shares at their discretion, providing them with potential capital appreciation and greater flexibility in their investment.
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