Equity share is a guarantee of fixed rate of dividend.

Question

State, whether the following statements is True or False. 

Equity share is a guarantee of fixed rate of dividend. 

Options 

• True 
• False

Answer 1

False 

Explanation: Preference shares are the shares with a fixed rate of dividend. They receive dividend at the pre-defined rate, whereas equity shares do not guarantee a fixed rate of dividend. Moreover, it is uncertain whether the dividend will be distributed to them or profits will be retained.