Question
Distinguish between equity share and preference share.
| Sr. no | Point of Difference | Equity Share | Preference Share |
| 1. | Requirements | To raise the share capital it is mandatory for to issue such share. | It is not essential to issue such shares. |
| 2. | Rate of Dividend | The dividend rate is not fixed. | The dividend rate is fixed. |
| 3. | Rights | The equity shareholders have a right to attend the meeting, voting rights and to select the directors of the company. | Preference shareholders have the right to vote only for the matters related to their rights. |
| 4. | Risk | Equity shares are more risky. | Preference shares are less risky. |
| 5. | Investors | The investors, who are ready to take risk and want to gain maximum return, invest in such kind of share. | The shareholder who wants stable income and safety of capital opt for preference share. |
| 6. | Market price | The market price of equity shares keep changing. | The rate of such share remains fixed. |
| 7. | Increase in Capital | The value of equity shares increases due right share and bonus share. | There is no increase in capital. |
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