the type of business finance that entitle 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 preferred stock. Preferred stock represents ownership in a company, and it is a type of stock that gives the shareholder priority over common stockholders in receiving dividends and assets in the event of liquidation. Preferred stockholders receive a fixed rate of dividend, which is typically higher than the dividend paid to common stockholders. This means that preferred stockholders are entitled to a fixed rate of return on their investment before common stockholders receive any dividend payments. Preferred stockholders also have a higher claim on the assets of the company than common stockholders in the event of liquidation. Common stockholders, on the other hand, have the potential for higher returns but also face higher risks. Debenture stock is a type of unsecured loan that does not entitle the holder to any ownership in the company, while a bank loan is a form of debt financing that requires the borrower to pay back the loan with interest, but does not entitle the lender to any ownership in the company. So, the option that best represents the type of business finance that entitles the holder to a fixed rate of dividend is "preferred stock."