The correct answer is: C. both dividend and repayment of capital.
Preference shares are a type of share that gives the holder a preferential right to dividends and repayment of capital over ordinary shares. This means that, if a company makes a profit, preference shareholders will receive a dividend before ordinary shareholders. Similarly, if a company is wound up, preference shareholders will be repaid their investment before ordinary shareholders.
Preference shares are often used by companies to raise capital. They are attractive to investors because they offer a higher level of security than ordinary shares. However, preference shareholders do not have the same voting rights as ordinary shareholders. This means that they have less control over the company.
Here is a brief explanation of each option:
- Option A: Dividends. Preference shareholders have a preferential right to dividends over ordinary shareholders. This means that, if a company makes a profit, preference shareholders will receive a dividend before ordinary shareholders.
- Option B: Repayment of capital. Preference shareholders also have a preferential right to repayment of capital over ordinary shareholders. This means that, if a company is wound up, preference shareholders will be repaid their investment before ordinary shareholders.
- Option C: Both dividend and repayment of capital. This is the correct answer. Preference shareholders have a preferential right to both dividends and repayment of capital over ordinary shareholders.
- Option D: Right to vote on all important motions in AGM. Preference shareholders do not have the same voting rights as ordinary shareholders. This means that they have less control over the company.