ALLInterview.com :: Home Page            
 Advertise your Business Here     
Browse  |   Placement Papers  |   Company  |   Code Snippets  |   Certifications  |   Visa Questions
Post Question  |   Post Answer  |   My Panel  |   Search  |   Articles  |   Topics  |   ERRORS new
   Refer this Site  Refer This Site to Your Friends  Site Map  Bookmark this Site  Set it as your HomePage  Contact Us     Login  |  Sign Up                      
Google
   
 
Categories >> Business Management >> Finance
 
 


 

 
 Business Administration interview questions  Business Administration Interview Questions (413)
 Marketing Sales interview questions  Marketing Sales Interview Questions (882)
 Finance interview questions  Finance Interview Questions (1052)
 Human Resources interview questions  Human Resources Interview Questions (703)
 Personnel Management interview questions  Personnel Management Interview Questions (11)
 Hotel Management interview questions  Hotel Management Interview Questions (18)
 Industrial Management interview questions  Industrial Management Interview Questions (58)
 Infrastructure Management interview questions  Infrastructure Management Interview Questions (12)
 IT Management interview questions  IT Management Interview Questions (87)
 Non Technical interview questions  Non Technical Interview Questions (68)
 Business Management AllOther interview questions  Business Management AllOther Interview Questions (367)
Question
Differences between Debentures and preference share capital?
 Question Submitted By :: Finance
I also faced this Question!!     Answer Posted By  
 
Answer
# 1
hello,
The difference between debentures and preference capital is
that debentures are the debt instrument issued by the
company , which could be secured or unsecured.Debentures
also have call option,convertiblity option.Debentures
holder do not hold the voting right.Debentures could be
converted into common shares.Debentures hold the coupon
payment.At the time of liquidation of the company they are
above the preference shareholders in getting back their
money.They do not have any liblity.

Preference share is long term equity capital of the
company.This is liablity owed by business to
shareholder.Preference share holders are entitled to get
the share dividend before common share holders.They too, do
not enjoy the voting right in annula general meeting of the
company,but voting right can be grated to them in condition
where company deferred the payment of dividend for
consecutive 3 years.They have limited liblity toward the
amount of their investment in the company.
 
Is This Answer Correct ?    21 Yes 3 No
Neerajkumar.che
 
Answer
# 2
It resembles equity in that: a) Preference dividend is
payable out of distribution of profits. It is not a tax
deductible payment, b) Preference dividend is not
obligatory payment, (in the sense that the payment of
preference dividend is entirely within the discretion of
the directors, though it can be accumulated.)
Preference capital is similar to debentures in several
ways: a)the dividend rate on preference dividend is usually
fixed, b) the claim of preference shareholders is prior to
the claim of equity shareholders, and c) preference
shareholders do not normally enjoy the rights to vote.
Preference capital has a prior claim/preference over equity
capital both on the income and assets of the company.
Preference dividend is cumulative in the sense that all
unpaid dividends are carried forward and payable before the
ordinary dividend is paid
Preference capital has a limited life after which it must
be retired.
Preference dividend is fixed and is expressed as a
percentage of par value. Non payment of dividend will not
force bankruptcy on the company
Preference capital may sometimes be converted (fully or
partly) into equity shares or debentures at a certain ratio
during a specified period.
Preference share capital ordinarily does not carry voting
rights. It is however, entitled to vote on every resolution
if:
(a) the preference dividend is in arrears for more than 2
years in respect of cumulative preference shares,
(b) the preference dividend has not been paid for a period
of two/more consecutive years or an aggregate period of
three/more years in the preceding six years ending with the
expiry of the immediately preceding financial year.
Debentures are instruments for raising long term debt
capital. Debenture holders are the creditors of the
company. The obligations of the company towards its
Debenture holders are similar to that of a borrower who
promises to pay interest and capital at specified times
When a debenture issue is sold to the investing public, a
trustee is appointed through a deed
A company may issue debentures which are convertible into
equity shares at the option of the Debenture holders.
Often debentures are secured by a charge on the immovable
properties both present and future, of the company by way
of an equitable mortgage. (by deposit of title deeds)
The retirement of debentures involves a substantial
financial burden
Debenture issues sometimes carry a call provision
Debentures are usually redeemable

The interest payment on the debentures is a fixed
obligation, irrespective of the financial situation of the
issuing firm
 
Is This Answer Correct ?    8 Yes 0 No
Kazasreeramprasad
 
 
 
Answer
# 3
Debentures are the long term loan securities of a company.
These securities are considered more secure than shares of
the company.
Secondly, a fixed rate of intereset is also paid on
debenture.
On Preference share a dividend is paid to prospective
shareholders.
 
Is This Answer Correct ?    2 Yes 0 No
Swarnlata
 

 
 
 
Other Finance Interview Questions
 
  Question Asked @ Answers
 
CORPORATE ACTION   3
What is authorized Capital? Infosys 10
Difference between Cashflow Vs Funds Flow Seaways 5
How many years will take for to multiply an amount in Indira Vikas Patra?   1
what are the documents/procedure required for hypothecation of stocks   1
what is the diff among repo rate,reverse repo rate and bank rate?   2
What are the Types of capital Resources?   2
what is working capital Capital-IQ 3
Why does a company issue stock ? Why would the funders share the profits wih thousands of people when they could keep profits to themselves?   2
what is the portfolio   8
explain the various sources of finance   2
what is leverage? Reliance 6
 
For more Finance Interview Questions Click Here 
 
 
 
 
 


   
Copyright Policy  |  Terms of Service  |  Articles  |  Site Map  |  RSS Site Map  |  Contact Us
   
Copyright 2013  ALLInterview.com.  All Rights Reserved.

ALLInterview.com   ::  KalAajKal.com