GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A stable and regular dividend keeps speculations away and prices of shares remain stable for longer period.
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The dividend policy should be framed in accordance to the expectations of shareholders.
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Legal requirements play an important role in the formulation of dividend policy.
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All of the above
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Detailed explanation-1: -A) True. Dividend policy affects cash flows. Any policy that affects cash flows matters. Shareholders can use “homemade” dividends to adjust dividend policy.
Detailed explanation-2: -Stable, constant, and residual are the three types of dividend policy. Even though investors know companies are not required to pay dividends, many consider it a bellwether of that specific company’s financial health.
Detailed explanation-3: -Expectations of the shareholders. Future financial requirements of the firm. Taxation policy of the government. Stability of dividends.
Detailed explanation-4: -Answer :-a. Dividends can be paid when there are losses Explanation-Dividends can not be declared or paid from any reserves other than free reserves. A company can d…