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Model Paper 3 — Business Studies STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceBusiness StudiesModel Paper 33 Marks
Question
What do you mean by preference shares? Discuss its various merits.
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Answer

Preference shares are kind of shares which promise the holder a fixed dividend, whose payment takes priority over that of ordinary shares. Benefits are in the form of an absence of a legal obligation to pay the dividend, improves borrowing capacity, saves dilution in control of existing shareholders, and no charge on assets.

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