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(Solved): Identify which of the following statements about the issue of ordinary preference shares can be rega ...



Identify which of the following statements about the issue of ordinary preference shares can be regarded as advantages to the organisation. (1) The control of the organisation will not be affected when the shares are issued as the shares normally do not have any voting rights. (2) Ordinary preference shares present a lower risk to lenders/investors and the lenders/investors therefore require a lower return. (3) Financial leverage will reduce as the number of ordinary preference shares (classified as equity) increases without bringing about dilution for the average shareholders. (4) Due to withholding tax on dividends, the company that issued the shares does not pay tax on the dividends that were declared and paid. (a) Statements (1), (2) and (3) (b) Statements (1), (2) and (4) (c) Statements (2), (3), and (4) (d) Statements (1), (2), (3) and (4) Select one: a. Statements (1), (2) and (4) b. Statements (2), (3), and (4) c. Statements (1), (2), (3) and (4) d. Statements (1), (2) and (3)



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