preference shares

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Explanation of "Preference Shares"

Definition: Preference shares (also called preferred stock) are a type of company stock that gives shareholders priority over common shareholders when it comes to receiving dividends. This means that if a company makes profits and pays out money to its shareholders, those with preference shares will get their payments first. However, preference shareholders usually do not have voting rights in company decisions.

Usage Instructions

• When to Use: You can use the term "preference shares" when discussing investments, finance, or company ownership.
• Context: This term is often used in business discussions, financial reports, or when talking about different types of stocks.

Example

• "After reviewing the company's financial situation, Sarah decided to invest in preference shares because she wanted a more secure income from dividends."

Advanced Usage

In more advanced discussions, you might encounter terms like: - Convertible Preference Shares: These can be converted into common shares under certain conditions. - Cumulative Preference Shares: If dividends are not paid in one year, they accumulate and must be paid in the future before common shareholders receive anything.

Word Variants

• Preference (noun): The act of choosing or liking one thing over another.
• Share (noun): A unit of ownership in a company.

Different Meanings

• "Preference" can also mean a greater liking for one alternative over another in general usage (e.g., "I have a preference for tea over coffee.").
• "Shares" can refer to any form of ownership in businesses or projects, not just preference shares.

Synonyms

• Preferred stock
• Preferred shares (in some regions)
• Cumulative shares (when referring to a specific type)

Idioms and Phrasal Verbs

• "To have a stake in something": This means to have an interest or investment in a situation, similar to owning shares in a company.
• "Put your money where your mouth is": This idiom means to back up your words with action, such as investing in preference shares if you believe in a company's future.

Summary

In summary, preference shares are a financial term used to describe a type of stock that ensures shareholders receive dividends before common shareholders, without giving them voting rights.

Academic

Noun

1. stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights

Synonyms

• preferred stock
• preferred shares