Which of the following is has a fixed rate of dividend?
Answer Details
Preference share has a fixed rate of dividend.
A preference share is a type of share that gives its holders priority over ordinary shareholders in terms of dividend payments and asset distribution. This means that preference shareholders are entitled to receive a fixed rate of dividend before any dividend is paid to ordinary shareholders.
The fixed rate of dividend is usually expressed as a percentage of the face value of the preference share, and it remains the same throughout the life of the share. This means that the preference shareholder can expect to receive a regular income from their investment, regardless of how the company is performing.
In contrast, ordinary shares do not have a fixed rate of dividend. The dividend paid on ordinary shares is determined by the company's profitability and is subject to change from year to year. Ordinary shareholders also have voting rights and are entitled to share in the company's profits and assets after preference shareholders have been paid.
In summary, preference shares have a fixed rate of dividend, while ordinary shares do not. Preference shareholders receive a regular income from their investment, regardless of how the company is performing, while ordinary shareholders share in the company's profits and assets after preference shareholders have been paid.