Cima F2 Exam Question No 5

Question No 5:

What is the Different types of preference shares? 

• cumulative preference shares, for which dividends must be paid including skipped dividends i.e. if a dividend is skipped one year, the skipped dividend has to be paid the following year along with the 'normal' dividend.
• non-cumulative preference shares, for which skipped dividends do not have to be paid later.
• participating preference shares, which give the holder fixed dividends plus extra earnings based on certain conditions (in a similar way to ordinary shares).
• convertible preference shares, which can be exchanged for a specified number of ordinary shares on some given future date.   

Cima F2 Exam Question No 4

Question No 4:

What is Preference shares?

Answer:

Preference shares are shares that pays a fixed dividend, which is paid in preference to (before) ordinary share dividends, hence the name.

Cima F2 Exam Question No 3

Question No 3:

What is Ordinary shares?

Answer:

Ordinary shares pay dividends at the discretion of the entity's directors. The ordinary shareholders of a company are the owners of the company and they have the right to attend meetings and vote on any important matters.

Cima F2 Exam Question No 2

Question No 2:

What is Share?

Answer:

A fixed identifiable unit of capital in an entity which normally has a fixed nominal value, which may be quite different from its market value. Shareholders receive returns from their investment in shares in the form of dividends, and also capital growth in the share price.

Cima F2 Exam Question No 1

Question No 1:

Sources of long term finance?

1. The capital markets
2. Bank borrowings
3. Government and similar sources