Equity vs Preference share Flashcards

Front

Meaning

Equity Shares

Preference Shares

Back

Equity - Represent ownership in the company.

Preference - Holders get a fixed dividend and preferential rights but have limited ownership control.

Front

Dividend:

Equity Shares

Preference Shares

Back

Equity - Dividend rate varies based on profit — not fixed.

Preference - Dividend is fixed and paid before equity shareholders.

Front

Voting Rights:

Equity Shares

Preference Shares

Back

Equity - Have full voting rights in company meetings.

Preference - Have no voting rights

Front

Risk:

Equity Shares

Preference Shares

Back

Equity - Higher risk — returns depend on company’s performance.

Preference - Lower risk — fixed income even if profits are small.

Front

Return (Dividend):

Equity Shares

Preference Shares

Back

Equity - Fluctuates depending on profits.

Preference - Fixed percentage return

Front

Convertibility:

Equity Shares

Preference Shares

Back

Equity - Not convertible into other shares.

Preference - Not convertible into other shares.