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Home Questions 3VWPWVTUAR
Target Exam

CUET

Subject

Business Studies

Chapter

Financial Management

Question:

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.

Options:

Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A.

Both Assertion (A) and reasoning (R) are correct and but R is not the correct explanation of A.

Assertion (A) is true but Reasoning (R) is not correct.

Assertion (A) is not true but Reasoning (R) is correct.

Correct Answer:

Assertion (A) is not true but Reasoning (R) is correct.

Explanation:

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.

CUET Questions