Target Exam

CUET

Subject

Business Studies

Chapter

Financial Management

Question:

Companies with a higher growth potential are likely to :

Options:

Pay lower dividends

Pay higher Dividends

Dividends are not affected

None of the above

Correct Answer:

Pay lower dividends

Explanation:

The correct answer is option 1- Pay lower dividends.

Companies with a higher growth potential are likely to Pay lower dividends.

Growth Opportunities: 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.