Match the items of List – I with the items of List – II. List-IList-II (a) Optimum dividend policy (i)…
An Optimum dividend policy balances current dividends and future growth to maximize stock price (a-i); a Stock split increases the number of shares outstanding by reducing…
Choose your answer
Match the items of List – I with the items of List – II.
| List-I | List-II |
|---|---|
| (a) Optimum dividend policy | (i) strikes a balance between current dividends and future growth so as to maximise the stock price. |
| (b) Stock split | (ii) a dividend paid in additional shares. |
| (c) Stock dividend | (iii) increases the number of shares outstanding. |
| (d) Tax preference theory | (iv) investors prefer to have companies retain earnings. |
Answer and explanation
Correct answer C
An Optimum dividend policy balances current dividends and future growth to maximize stock price (a-i); a Stock split increases the number of shares outstanding by reducing par value (b-iii); a Stock dividend is a dividend paid in additional shares (bonus shares) (c-ii); and the Tax preference theory holds that investors prefer companies to retain earnings for lower-taxed capital gains (d-iv), matching -(i), (b)-(iii), (c)-(ii), (d)-(iv).
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UGC NET Management