How Do You Spell DEFERRED SHARE?
Pronunciation: [dɪfˈɜːd ʃˈe͡ə] (IPA) 
Pronunciation: [dɪfˈɜːd ʃˈe͡ə] (IPA)
A deferred share is a type of investment security that grants its holders certain rights and privileges, but delays the payment of dividends until a specified future date or event. It is a financial instrument used by companies to provide shareholders with additional incentives or benefits.
Deferred shares typically grant voting rights to their holders, allowing them to participate in decision-making processes within the company. However, the key distinguishing feature of deferred shares is their delayed dividend payments. Unlike common shares, which typically pay dividends on a regular basis, deferred shares postpone these payments until a predetermined time.
The deferral of dividends allows the company issuing the shares to prioritize the allocation of funds towards other areas such as expansion, research and development, or debt reduction. The deferred dividends are usually accumulated and paid to the shareholders at a later date, often upon the occurrence of a specific event or achievement of certain financial milestones.
Deferred shares can be attractive to investors seeking long-term capital appreciation rather than immediate income or dividend payments. The potential for higher returns in the future can make deferred shares appealing, particularly if the company's prospects are favorable or if the deferred shares offer additional rights or advantages compared to common shares.
However, as with any investment, there are risks associated with deferred shares, and investors should carefully assess the terms and conditions before making a decision.
The term "deferred share" can be broken down into two parts: "deferred" and "share".
1. Deferred: The word "deferred" comes from the Latin word "deferre", which means "to carry away". It originally referred to postponing or delaying something. In finance and investment, the term "deferred" is used to describe an action of delaying or postponing the receipt or distribution of payment or benefit, typically with the expectation of receiving it in the future.
2. Share: The word "share" has its roots in Anglo-Norman and Old French, derived from the Latin word "sors" meaning "lot" or "portion". In financial contexts, a share represents ownership or equity in a company or organization. It refers to a unit of ownership interest that entitles the holder to a portion of the company's assets and profits.
