The issuing company has the option and is not obligated to buy callable
common shares at a predetermined price.
Equity Investments MCQ - Equity Investments Section 1
- A They entitle shareholders to participate in additional dividends if the company’s profits exceed a predetermined level.
- B They entitle shareholders to participate in corporate decisions through voting rights.
- C They entitle shareholders to participate in additional distribution of the company’s assets upon liquidation.
Participating preference shares do not entitle the shareholders to
participate in corporate decisions through voting rights. Options A and C
are correct.
Common stock holders are least likely to have a say in determining the
dividend payments. They receive dividends after preferred stock holders
have been paid. Common stock holders can vote on issues like selection of
auditors and merger decisions.
Dividends are generally predictable as with coupon payments on fixed
income securities.
