Introduction to Financial Markets (405) — CBSE Class 10 board question

| Basis | Equity Shareholders | Preference Shareholders |
|---|---|---|
| Dividend | Receive dividend after preference shareholders; rate is not fixed | Receive fixed rate of dividend on priority |
| Repayment | Capital repaid last, after preference shareholders | Capital repaid before equity shareholders at winding up |
| Voting Rights | Have full voting rights in company matters | Generally do not have voting rights |
| Risk | Bear higher risk | Bear comparatively lower risk |

Equity shareholders are the real owners of the company and bear maximum risk, while preference shareholders enjoy preferential treatment in dividend payment and capital repayment but have limited control over the company.

Source: Chapter 2, Securities Market

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• CBSE expects a tabular format for "differentiate between" questions — it earns marks quickly and is easy to read.
• Four clear points of difference = 4 marks. Each row should have a clear basis, not just vague statements.
• Key terms: fixed dividend, preferential rights, voting rights, winding up — examiners look for these specific words.
• Keep the concluding line brief; it adds context without padding.