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Exam Code: CDCE-001

Exam Name: Certified Data Centre Expert (CDCE)

Certification Provider: GAQM

Related Certification: Certified Data Centre Expert (CDCE)

CDCE-001 Certified Data Centre Expert (CDCE)

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A company plans to raise finance for a new project.
It is considering either the issue of a redeemable cumulative preference share or a Eurobond.
Advise the directors which of the following statements would justify the issue of preference shares over a bond?
A. If profits are poor, dividends do not have to be paid on the preference share - however, interest would need to be paid on the Eurobond.
B. The issue of the preference share would reduce the company's gearing - however, the Eurobond would increase it.
C. The company can claim tax relief on the dividend paid on the preference share at a higher rate than the interest paid on the Eurobond.
D. Preference shares are not secured against the assets of the business - however, the Eurobond would be.
Answer: A

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