ICSE Class 10 Commerce 2022 Solved Papers
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Question : 21
Total: 29
State three differences between Equity and Preference shares.
Solution:
Differences between Equity and Preference shares:
| Equity | Preference Shares |
|---|---|
| 1. Nominal value of equity shares is generally low. | Nominal value of preference shares is generally high. |
| 2. Rate of dividend is fluctuates with profits. | Rate of dividend is regular and fixed. |
| 3. It is not repayable during the life time of the company. | It may be redeemed after a fixed period or at the option of the company. |
| 4. It may not be convertible into preference shares. | It may be convertible into equity shares. |
| 5. Its sink and swim with the company. | A fixed rate of dividend assures regular and steady income. |
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