Read the following statements and answer the question.
Assertion: The dividend in growth companies is higher than that in the non– growth companies.
Reasoning: Companies having good growth opportunities retain more money out of their earnings so as to finance the required investment.
Answer & explanation
Correct answer: option 4
The correct answer is option 4- Assertion (A) is not true but Reasoning (R) is correct.
Assertion: The dividend in growth companies is higher than that in the non– growth companies. This is false.
Companies having good growth opportunities retain more money out of their earnings so as to finance the required investment. The dividend in growth companies is, therefore, smaller, than that in the non growth companies.
Reasoning: Companies having good growth opportunities retain more money out of their earnings so as to finance the required investment. This is true.
Thus, assertion is false and reason is true.