is there any risk in preference share
Dear student,
In comparison to bonds, preference shares are riskier, if company does not pay interest to debenture holders, they can bankrupt the company but preference shareholders can't do so.
In comparison to equity, preference shares are less risky as in event of liquidation or wind up of company preference shareholders are paid first before equity, but even before preference the claims of debenture holders are settled first.
Regards
In comparison to bonds, preference shares are riskier, if company does not pay interest to debenture holders, they can bankrupt the company but preference shareholders can't do so.
In comparison to equity, preference shares are less risky as in event of liquidation or wind up of company preference shareholders are paid first before equity, but even before preference the claims of debenture holders are settled first.
Regards