NISM Series IX (Merchant Banking) Practice Questions - NISM-Series-IX Merchant Banking Certification Examination Exam

Which of the following is a key feature of cumulative preference shares that distinguishes them from equity shares?

They carry mandatory voting rights on all corporate resolutions. Unpaid dividends accumulate and must be paid before any dividend is paid to equity shareholders. They represent a permanent, non-redeemable equity stake in the company. The dividend rate fluctuates dynamically based on annual net profits.

Correct Answer:

Unpaid dividends accumulate and must be paid before any dividend is paid to equity shareholders.

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