CFA Level I · CFA Level I Exam · Equity Instrument Features
Compared with common shareholders, holders of non-callable, non-convertible preference shares with a fixed dividend are most likely to:
Preference shareholders most likely have priority over common shareholders for dividends and for liquidation proceeds. They typically have limited or no voting rights, and their fixed dividend means they do not participate in earnings growth the way common shareholders do.
- Ahave priority over common shareholders for dividends and for assets in liquidationCorrect
- Breceive voting rights equal to those of common shareholders
- Cbenefit fully from growth in the issuer's earnings through rising dividends
Explanation
Preference shares rank ahead of common shares for dividend payments and for the distribution of assets in liquidation. They usually carry limited or no voting rights, and a fixed dividend means they do not share fully in earnings growth.
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