Which of the following characteristics is not associated with ordinary shares?
residual claim on income and assets.
vote by proxy. limited liability.
Solution : Cumulative dividends is the characteristic not associated with Ordinary Shares.
Reason : Cumulative dividends are characterstic of Preference Shares. This dividend must be paid before any other dividends paid to common shareholders.
Other choices are incorrect due to the below reasons:
Residual claim on income and assets - This is a Characteristic of Ordinary shares; wherein they have the right to company's residual profits after all the claims have been made.
Vote by proxy - This is a Characteristic of Ordinary shares; where they come with Voting rights
Limited liability - This is a Characteristic of Ordinary shares; wherein the losses are limited only to extent of shares held or amount invested with the company.
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