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Which of the following is not an example of a potential ordinary share? Question 7Select one: a. Convertible preferred share b. Standard preferred share c. Share warrants d. Convertible debt

Question

Which of the following is not an example of a potential ordinary share?

Question 7Select one:

a. Convertible preferred share

b. Standard preferred share

c. Share warrants

d. Convertible debt

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Solution

The correct answer is b. Standard preferred share.

Here's why:

a. Convertible preferred share - This is a type of preferred share that holders can convert into a certain number of ordinary shares. So, it can potentially become an ordinary share.

b. Standard preferred share - These shares have a fixed dividend, but shareholders do not have voting rights. Importantly, they cannot be converted into ordinary shares, so they are not a potential ordinary share.

c. Share warrants - These are derivatives that give the holder the right to buy the underlying company's ordinary share at a specific price, within a certain time frame. Therefore, they can potentially become an ordinary share.

d. Convertible debt - This is a type of bond that the holder can convert into a predetermined number of ordinary shares. So, it can potentially become an ordinary share.

This problem has been solved

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