Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:
Which of the following preference shares are issued with a repayment option within a stipulated time period?
Options:
Cumulative preference shares
Participating preference shares
Redeemable preference shares
None of these
Correct Answer:
Redeemable preference shares
Explanation:
Redeemable preference shares, also known as redeemable preferred shares or redeemable preferred stock, are a type of financial instrument issued by corporations as a form of financing. They combine features of both equity and debt securities. These shares are considered a type of preferred stock because they come with certain preferential rights and benefits, but they also have a unique characteristic that allows the issuing company to repurchase or "redeem" them from shareholders at a specified future date or under certain conditions.