Practicing Success

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:
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.