Are shares all the same, i.e. carry the same rights?

Question:

Are shares all the same, i.e. carry the same rights?

Answer and Explanation:

Shares are not all the same. Indeed, they vary in different aspects as some position shareholders on the upper end to enjoy various rights and privileges than others. The common types of shares include preference and ordinary shares. The former do not have voting rights contrary to ordinary shareholders who have voting rights. Moreover, preference shareholders are given the first priority for payment in the event a company is declared bankrupt. Additionally, preference shareholders are given the priority for dividend payment contrary to ordinary shares which are given relatively low priority.

Other types of shares include cumulative and non-cumulative shares. Shareholders of cumulative shares have the right to demand missed dividends which can be rolled over to the next dividend payment period. However, shareholders with non-cumulative shares do not have the right to demand missed dividends because they are not entitled to unpaid dividends.


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How to Calculate Earnings Per Share: Definition & Formula

from Introduction to Business: Homework Help Resource

Chapter 24 / Lesson 14
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