ECONOMICS

Detailed explanation-1: -A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-invested in the business (called retained earnings).

Detailed explanation-2: -A dividend is a type of distribution made by a company to its shareholders. The ordinary meaning of ‘dividend’ is a share of profits, whether at a fixed rate or otherwise, allocated to the holders of shares in a company.

Detailed explanation-3: -General reserve can be used for distribution of dividend among shareholders when profit is insufficient.

Detailed explanation-4: -In the context of business law, distribution of profits is the dispensing of the profits amongst partners of partnership, members of a Limited Liability Company, or employees in a company, as per the terms outlined in a profit-sharing agreement.

Detailed explanation-5: -The shareholder chooses how to receive the dividend by: receiving a cash payment at a fixed price linked to the share price in previous days; selling the dividend rights on the market at the share price at the time of sale; or holding on to the new shares as a result of the assigned rights.