Preference Shares
Class of shares with priority over ordinary shares for dividends/asset distribution.
Formula
Preference Dividend = Face Value × Fixed Dividend Rate
Real World
Lloyds Banking Group issues preference shares that pay a fixed annual dividend to holders before any ordinary dividend is declared, making them attractive to risk-averse investors seeking stable income.
Exam Focus
In 'compare' questions, explicitly state that preference shareholders receive fixed dividends but typically have no voting rights, unlike ordinary shareholders.
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