BUISENESS MANAGEMENT
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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pay lower dividends
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pay higher dividends
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dividends are not affected
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none of the above
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Detailed explanation-1: -Companies with higher growth opportunities tend to retain more money out of their earnings so as to finance the required investments. Therefore, higher growth prospects result in lower dividend payment.
Detailed explanation-2: -Companies who are having the higher growth pattern are likely to pay lower dividends.
Detailed explanation-3: -Companies with higher growth rate are likely to pay lower rate of dividend. Companies with higher growth rate would prefer to plough back its profit for the growth of the company which would result in long term benefits rather than distributing dividends which is temporary.
Detailed explanation-4: -A company having higher and stable earnings can declare higher dividends than a company with lower and unstable earnings.