Explain the following;
i) Issued Shares
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Issued Shares: represents the actual number of shares that have been issued to shareholders. The number of issued shares cannot exceed the number of authorized shares. (3 marks)
ii) Preference Shares
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Preference shares are shares which confer certain preferential rights on their It can be classified into Redeemable and Irredeemable preference shares. Redeemable preference shares means the company will redeem (repay) the nominal value of those shares at a later date whiles Irredeemable preference shares are treated just like other shares. They form part of the equity and their dividend are treated as appropriation of profit. (4 marks)
iii) Ordinary Shares
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Ordinary shares are shares which carry no right to a fixed dividend but are entitled to all profits left after payments of any preference dividends. Thus a holder only receives a dividend after fixed dividends have been paid to preference shareholders. The amount of ordinary dividends normally fluctuates although it is often expected that it will increase from year to year. (3 marks)
iv) Debentures
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Debenture: is a long-term security yielding a fixed rate of interest, issued by a A debenture is a type of debt instrument that is not secured by physical assets or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer. Both corporations and governments frequently issue this type of bond to secure capital.
Debentures have no collateral. Bond buyers generally purchase debentures based on the belief that the bond issuer is unlikely to default on the repayment. An example of a government debenture would be any government-issued Treasury bond (T-bond) or Treasury bill (T-bill). T-bonds and T-bills are generally considered risk-free because governments, at worst, can print more money or raise taxes to pay these types of debts. (4 marks)