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Preference shares |
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Preference sharesShares in a company which give their holders an entitlement to a fixed dividend but which do not usually carry voting rights. The important difference between preference and ordinary shares are:The dividend on ordinary shares is uncertain and variable (high when the company does well, poor or non-existent when it does badly). Preference shareholders get a fixed dividend which, if not paid, usually accrues until it can be.Each ordinary share usually carries a vote. Preference shares do not usually carry a vote unless dividends fall into arrears.In the event of a winding up, preference shares are usually repayable at par value, and rank above the claims of ordinary shareholders (but behind bank and trade creditors).Preference shares may be issued with the right of conversion into ordinary shares. These are called convertibles.Similar MatchesLoan Preference PrincipleLoan Preference PrincipleThe theory that a covered loan is less expensive when its cost is calculated in one currency, it will also be less expensive in all other currencies. Tax preference itemTax preference itemItems that must be included when calculating the alternative minimum tax. Liquidity preference hypothesisLiquidity preference hypothesisThe argument that greater liquidity is valuable, all else equal. Also, the theory that the forward rate exceeds expected future interest rates. Identical preferencesIdentical preferencesThe assumption that individuals -- either within a country or in different countries -- have the same preferences. To be useful, since individuals' and countries' incomes may differ, the assumption is often used together with homothetic preferences. Involuntary liquidation preferenceInvoluntary liquidation preferenceA premium that must be paid to preferred or preference stockholders if the issuer of the stock is forced into involuntary liquidation. Further SuggestionsTariff preferenceredeemable preference shares Community preferences Preferences Preference stock participating preference shares Generalized System of Preferences Weak axiom of revealed preference Revealed preference cumulative preference shares Homothetic preferences stepped preference shares Preference share Preference for variety |
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