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Why the company prefering prefence capitalrather than
debenture capital?
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Answer Posted / giri
prference capial is prefered by the companies because of
the a)No charge is created on the assets of the company. b)
There is no obligation to pay preference dividend all the
time. During loss making year company may defer preference
dividend.
But in case of debentures, the company either make profit
or loss, it has to pay to debentureholders, else they can
sue the company or sell the assets to recover their loan
amount.
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