Equity Shares vs Preference Shares MCQs September 11, 2025 by u930973931_answers 50 Score: 0 Attempted: 0/50 Subscribe 1. Equity shareholders are also known as: (A) Creditors of the company (B) Owners of the company (C) Lenders to the company (D) Preference holders 2. Preference shareholders are also called: (A) Risk takers (B) Quasi-debt holders (C) Permanent owners (D) Managers 3. Which shareholders have voting rights in company matters? (A) Equity shareholders (B) Preference shareholders (C) Bondholders (D) Debenture holders 4. Which type of shares gets fixed dividend? (A) Equity shares (B) Preference shares (C) Bonus shares (D) Rights shares 5. Equity dividend is paid: (A) At a fixed rate (B) Only after preference dividend (C) Before preference dividend (D) Compulsorily every year 6. Preference dividend is: (A) Variable (B) Fixed (C) Linked with profit growth (D) Decided by equity holders 7. Who bears the highest risk in a company? (A) Creditors (B) Equity shareholders (C) Preference shareholders (D) Debenture holders 8. Preference shareholders have a preference in: (A) Voting (B) Dividends and repayment of capital (C) Electing directors (D) Decision-making 9. Equity shareholders are rewarded mainly through: (A) Bonus shares and interest (B) Dividends and capital appreciation (C) Fixed return (D) Only interest 10. Which shareholders may receive arrears of dividend in case of cumulative type? (A) Equity shareholders (B) Cumulative preference shareholders (C) Non-cumulative preference shareholders (D) Debenture holders 11. The face value of preference shares is usually: (A) Higher than equity shares (B) Lower than equity shares (C) Equal to equity shares (D) Zero 12. Equity shareholders have claim on assets: (A) Before preference shareholders (B) After preference shareholders and creditors (C) Equal to preference shareholders (D) Not at all 13. Preference shares are suitable for: (A) Risk-loving investors (B) Risk-averse investors (C) Speculators only (D) Brokers only 14. Equity capital is also called: (A) Fixed cost capital (B) Variable cost capital (C) Debt capital (D) Risk-free capital 15. Which type of shareholders can influence management decisions? (A) Preference shareholders (B) Equity shareholders (C) Debenture holders (D) Creditors 16. Dividend on preference shares is paid: (A) Only when company earns profit (B) Irrespective of profits if reserves allow (C) After equity dividend (D) Never 17. Which shares may be converted into equity? (A) Non-convertible preference shares (B) Convertible preference shares (C) Redeemable debentures (D) Bonds 18. Equity dividend rate depends on: (A) Fixed percentage (B) Profitability of the company (C) Government rules (D) SEBI only 19. Preference shares may be: (A) Redeemable or irredeemable (B) Always irredeemable (C) Only convertible (D) Only bonus type 20. Equity shareholders are called: (A) Creditors (B) Real owners (C) Preference holders (D) Bankers 21. Which type of shares cannot demand repayment of capital during lifetime of company? (A) Preference shares (B) Equity shares (C) Bonds (D) Debentures 22. Preference shareholders usually have: (A) No voting rights (B) Full voting rights (C) Rights equal to equity (D) Extra voting rights 23. The cost of equity is generally: (A) Higher than preference shares (B) Lower than preference shares (C) Equal to preference shares (D) Zero 24. Dividend on preference shares is: (A) Compulsory payment (B) Optional always (C) Paid before equity dividend (D) Paid after equity dividend 25. Equity shareholders have: (A) Priority in repayment (B) Residual claim (C) Preference claim (D) No claim at all 26. Which type of shareholders get bonus shares? (A) Preference (B) Equity (C) Debenture (D) Creditors 27. Preference capital is treated as: (A) Hybrid security (B) Pure debt (C) Pure equity (D) Loan only 28. Equity shares are issued to: (A) Owners of the company (B) Creditors only (C) Banks only (D) Preference holders only 29. Redeemable preference shares must be redeemed within: (A) 5 years (B) 20 years (C) 30 years (D) Unlimited 30. Equity shareholders are often referred to as: (A) Insiders (B) Residual owners (C) Creditors (D) Lenders 31. Which shareholders enjoy capital appreciation benefits? (A) Equity shareholders (B) Preference shareholders (C) Debenture holders (D) Bondholders 32. The risk of loss in company liquidation falls mainly on: (A) Equity shareholders (B) Preference shareholders (C) Creditors (D) Debenture holders 33. Preference dividend is payable at: (A) Discretion of directors (B) Fixed percentage on face value (C) Market value (D) Residual earnings only 34. Equity shares are generally: (A) Redeemable (B) Irredeemable (C) Convertible into preference (D) Redeemable at fixed rate 35. Cumulative preference shareholders have right to: (A) Dividend in arrears (B) Voting in all cases (C) Bonus shares (D) IPO profits 36. Which shareholders have fluctuating returns? (A) Equity (B) Preference (C) Debentures (D) Bonds 37. Equity shareholders are compensated after: (A) Preference and debt holders (B) Before preference holders (C) Only after creditors (D) Before creditors 38. Preference shares do not usually carry: (A) Voting rights (B) Dividend rights (C) Capital rights (D) Redemption rights 39. Equity shares represent: (A) Ownership capital (B) Loan capital (C) Debt capital (D) Government capital 40. Preference shares represent: (A) Debt and equity features both (B) Only debt (C) Only equity (D) Loan capital 41. Equity shareholders are rewarded when: (A) Company earns profit (B) Dividend is declared (C) Market price rises (D) All of the above 42. Which of the following is NOT a right of preference shareholders? (A) Fixed dividend (B) Priority in capital repayment (C) Right to vote on all matters (D) Priority over equity dividend 43. Equity shareholders can lose their entire investment if: (A) Company is liquidated (B) Company has high profits (C) Preference dividend is declared (D) Debt is issued 44. Preference shares are similar to: (A) Bonds with fixed return (B) Equity with voting rights (C) Debentures with profit share (D) Loans with ownership rights 45. Equity shareholders provide: (A) Permanent capital (B) Temporary capital (C) Only credit facility (D) Secured capital 46. Preference shareholders get dividend: (A) Even in losses if reserves allow (B) Only in liquidation (C) Only after equity dividend (D) Every month 47. Equity shareholders affect company policies through: (A) Voting in general meetings (B) Dividend entitlement (C) Debt agreements (D) Reserve funds 48. Preference shareholders are often treated as: (A) Creditors with special rights (B) Permanent owners (C) Residual owners (D) Speculators 49. Which shareholders have no guarantee of dividend? (A) Equity (B) Preference (C) Debenture (D) Bondholders 50. Equity shares are suitable for: (A) Investors willing to take risk for high returns (B) Investors who want fixed income (C) Creditors only (D) Banks only