Characteristics of Preferred Shares

Easy Equity Markets And Instruments Preferred Shares

Preferred shares are a type of equity security that typically provides dividends at a fixed rate and has preference over common shares when it comes to asset distribution during liquidation. Understanding the characteristics of preferred shares is essential for investors evaluating their investment options in equity markets.

Which of the following statements about preferred shares is true?

Preferred shares always provide voting rights to shareholders.

Preferred shares have a fixed dividend rate and priority over common shares in dividend payments.

Preferred shares are riskier than common shares due to their lower claim on assets.

Hint

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