The correct answer is: Preference share of a company cannot be redeemed at a discount.
A preference share is a type of share that gives its holders a preference over ordinary shareholders in the payment of dividends and the distribution of assets in the event of liquidation. Preference shares are usually redeemed at par value, which is the price at which they were originally issued. However, they can also be redeemed at a premium or a discount.
A premium is a price that is higher than the par value. A discount is a price that is lower than the par value. Preference shares are rarely redeemed at a discount, as this would be disadvantageous to the shareholders.
Here is a brief explanation of each option:
- At par: This means that the preference shares are redeemed at the price at which they were originally issued. This is the most common way to redeem preference shares.
- At premium: This means that the preference shares are redeemed at a price that is higher than the par value. This is less common than redeeming at par, but it can happen if the company’s share price has increased since the preference shares were issued.
- At discount: This means that the preference shares are redeemed at a price that is lower than the par value. This is very rare, as it would be disadvantageous to the shareholders.
- At face value: This is the same as at par.