Dividend Policy MCQs

What is the primary purpose of paying dividends?

• To increase stock prices

• To share profits with shareholders

• To attract new customers

• To reduce company expenses

Which type of dividend involves providing additional shares to shareholders?

• Cash dividend

• Stock dividend

• Property dividend

• Liquidation dividend

What does the dividend yield measure?

• Profit margin percentage

• Annual dividend as a percentage of market price

• Total stock value growth

• Earnings per share

Who is responsible for approving dividend declarations in a company?

• Shareholders

• Board of Directors

• Financial Analysts

• Tax Authorities

Which type of dividend is paid when a company is liquidating its assets?

• Cash dividend

• Scrip dividend

• Liquidation dividend

• Special dividend

What is a stable dividend policy?

• Dividends are paid from leftover profits.

• Dividends are always reinvested into the company.

• Dividends are paid regularly at a fixed amount or percentage.

• Dividends vary with company profits.

What does the constant payout ratio policy involve?

• Paying dividends based on a fixed percentage of profits

• Paying only cash dividends

• Skipping dividends when profits are low

• Distributing dividends equally among shareholders

What is the significance of dividend reinvestment plans (DRIPs)?

• Allows shareholders to receive dividends in cash only

• Allows shareholders to reinvest dividends to acquire more shares

• Offers tax-free dividends to shareholders

• Guarantees higher dividend payouts

What type of dividend is paid out of a company's excess profits or extraordinary events?

• Regular dividend

• Liquidation dividend

• Special dividend

• Residual dividend

What factor most directly affects a company's ability to pay dividends?

• Market trends

• Shareholder preferences

• Profitability

• Dividend history