BUISENESS MANAGEMENT
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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pay low dividend
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Pay higher dividends
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Dividends are not affected by growth consideration
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Dividends may be affected
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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 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-3: -Companies who are having the higher growth pattern are likely to pay lower dividends.
Detailed explanation-4: -A company having higher and stable earnings can declare higher dividends than a company with lower and unstable earnings.
Detailed explanation-5: -If the shareholders prefer regular income, how does this affect the dividend decision: It will lead to payment of dividend. It is the indicator to retain more earnings.