Assertion (A): The important aspect of dividend policy is to determine the amount of earnings to be distributed to shareholders and the amount to be retained in the firm.
Reason (R): Dividend policy of the firm has its effect on both the long term financing and the wealth of shareholders.

A) Both (A) and (R) are correct and (R) is the correct explanation of (A) B) Both (A) and (R) are correct, but (R) is not the correct explanation of (A) C) (A) is correct, but (R) is incorrect D) (R) is correct, but (A) is incorrect

Answer & Solution

Correct Answer: Option A

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b. Net operating income approach	2. Working capital management
c. Short-term money market instrument	3. Capital structure
d. Factoring	4. Arbitrage

Assertion (A) The important aspect of dividend policy is to determine...

Assertion (A): The important aspect of dividend policy is to determine the amount of earnings to be distributed to shareholders and the amount to be retained in the firm. Reason (R): Dividend policy of the firm has its effect on both the long term financing and the wealth of shareholders.

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Related Questions on Business Finance

Assertion (A): The important aspect of dividend policy is to determine the amount of earnings to be distributed to shareholders and the amount to be retained in the firm.
Reason (R): Dividend policy of the firm has its effect on both the long term financing and the wealth of shareholders.