Several newbie investors enter the stock market to gain practical knowledge and to multiply their money. However, they come to a variety of jargon and wonders and equity shares VS preference shares are one of them.
Equity shares and preference shares might sound similar, but they are different from each other. The primary difference between both these shares is the way shareholders receive their dividends.
However, both equity shares and preference shares have different benefits to investors. This article will help you understand the major difference between these shares in detail.
Equity shareholders have a high risk of exposure because of the market’s volatility and the company’s performance. At the same time, preference shares do not pose any threat and are safer than equity shares.
Equity shares are called ordinary shares of the company offered to the investors to raise capital and expand their business.
Equity shareholders are called part owners of the company based on the shares they own. On the other hand, preference shares do not have any advantage in terms of role in management.
Equity shareholders are eligible to receive bonus shares from the company, whereas preference shareholders are not eligible to receive bonus shares.