at par
at premium
out of free reserves
all of these
Answer is Right!
Answer is Wrong!
The correct answer is D. all of these.
A company can redeem preference shares at par, at premium, or out of free reserves.
- Redeem at par means that the company pays the shareholder the face value of the share.
- Redeem at premium means that the company pays the shareholder more than the face value of the share.
- Redeem out of free reserves means that the company uses its accumulated profits to pay the shareholder.
The company’s articles of association will state the terms and conditions under which the preference shares can be redeemed.