The type of business finance that entitles the holder to a fixed rate of dividend is______________--
Answer Details
The type of business finance that entitles the holder to a fixed rate of dividend is called "preferred stock."
Preferred stock is a type of investment in a company that gives shareholders a higher priority claim on dividends compared to common stockholders. This means that if the company distributes profits as dividends, the holders of preferred stock will receive their dividend payments first, before common stockholders.
In addition to priority dividend payments, preferred stockholders may also have other advantages over common stockholders, such as the ability to vote on certain matters, and a greater degree of safety in the event of bankruptcy or liquidation.
The key feature of preferred stock is that it provides a fixed rate of dividend, which is agreed upon at the time of issuance. This means that the company is obligated to pay a certain amount of dividend to preferred stockholders, regardless of how the company performs financially. This can make preferred stock a relatively stable investment option, especially for investors who are seeking a regular income stream.