Asset Classes Equities Flashcards
A participating preference share:
Entitles the holder to additional dividends
What 2 statements are true of cumulative preference shares?
Dividends are paid from undistributed profits.
Directors may withhold the annual dividend.
An investor has an investment of £4000 in a company consisting of 1,000 £2 nominal value fully-paid up shares. If the company went into liquidation, what is the most the investor would be liable for?
Nothing further, as the shares are fully paid up.
Which of the following is the main purpose of authorised share capital?
To place a limit on the amount of share capital that can be issued to existing and new shareholders.
Preference shares
The dividend can be waived.
Bearer security
An anonymous freely transferable security.
Why might an investor buy ordinary shares?
Interest in company, opportunity for capital growth of investment, variable returns on investment in line with corporate success
The authorised share capital sets out:
number of shares that can be issued to shareholders.
Which of the following is not true of preference shares?
In case of liquidation, holders of preference shares have priority inn terms of the payment of dividend arrears over ordinary shareholders.
With regards to depository receipts, what is the longest time period permitted for grey market trading?
3 months.
Return on a preference share
usually fixed - provided that the dividend is declared by the directors
Preference shares
carry the right to vote when the company fails to pay a dividend
Preference shares
they do not carry pre-emption rights.
A company announces an increase in the dividend that it will pay out to shareholders in response to continued growth profit. Assuming all of the following shares are in issue, which of the following is least likely to benefit from this increase?
Redeemable preference shareholder
Preference shareholders and voting rights
Preference shareholders may get voting rights in certain circumstances
