The shares that must be redeemed first at liquidation of a company are?

Assessment: JAMB UTME - Economics - 1997 Subject: Economics

Question 1 Report

The shares that must be redeemed first at liquidation of a company are?
Answer Details
Preference shares are the shares that must be redeemed first at liquidation of a company. This is because preference shares have a preferential right over ordinary shares in terms of dividends and repayment of capital. The holders of preference shares receive their dividends before ordinary shareholders, and in the event of a liquidation, they have priority in receiving their capital back before ordinary shareholders. Therefore, preference shares are a form of equity that offers a higher level of security to investors in terms of return of capital.
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