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The basic consideration for dividend pay out for a company excludes which one of the following?
- a)Investment opportunities for the company
- b)Expectations of the shareholders of the company
- c)Legal and financial restrictions for the company
- d)Stability of the dividend considerations
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
The basic consideration for dividend pay out for a company excludes wh...
Dividend policy of a company sets the guidelines to be followed while deciding the amount of dividend to be paid out to the shareholders. The company needs to adhere to the dividend policy while deciding the proportion of earnings to be distributed and the frequency of the distribution. The following are the various factors/determinants that impact the dividend policy of a company:
- Investment opportunities for the company
- Expectations of the shareholders of the company
- Legal and financial restrictions for the company
Most Upvoted Answer
The basic consideration for dividend pay out for a company excludes wh...
Dividend policy of a company sets the guidelines to be followed while deciding the amount of dividend to be paid out to the shareholders. The company needs to adhere to the dividend policy while deciding the proportion of earnings to be distributed and the frequency of the distribution. The following are the various factors/determinants that impact the dividend policy of a company:
- Investment opportunities for the company
- Expectations of the shareholders of the company
- Legal and financial restrictions for the company
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The basic consideration for dividend pay out for a company excludes wh...
Explanation:
The basic consideration for dividend pay out for a company excludes the stability of the dividend considerations. Here is an explanation of why the other options are included in the consideration:
Investment opportunities for the company:
When a company has investment opportunities that can generate a higher return on investment compared to distributing dividends, it may choose to reinvest the earnings back into the business. This is done to enhance the growth and profitability of the company in the long run. Therefore, investment opportunities are an important consideration in determining the dividend pay out for a company.
Expectations of the shareholders of the company:
Shareholders invest in a company with the expectation of receiving returns on their investment. Dividends are a way for the company to distribute profits to its shareholders. Therefore, the expectations of the shareholders play a crucial role in determining the dividend pay out for a company.
Legal and financial restrictions for the company:
Companies must comply with legal requirements and financial restrictions imposed by regulatory authorities and financial institutions. These restrictions may include maintaining a certain level of capital, meeting debt obligations, and complying with tax laws. Such legal and financial restrictions are considered while determining the dividend pay out for a company.
Stability of the dividend considerations:
The stability of dividend considerations refers to the consistency and predictability of dividend payments. Companies aim to maintain a stable dividend policy to provide shareholders with a reliable income stream. However, this option is excluded from the basic consideration for dividend pay out because it is an essential factor that is taken into account in determining the dividend amount.
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The basic consideration for dividend pay out for a company excludes which one of the following?a)Investment opportunities for the companyb)Expectations of the shareholders of the companyc)Legal and financial restrictions for the companyd)Stability of the dividend considerationsCorrect answer is option 'D'. Can you explain this answer?
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The basic consideration for dividend pay out for a company excludes which one of the following?a)Investment opportunities for the companyb)Expectations of the shareholders of the companyc)Legal and financial restrictions for the companyd)Stability of the dividend considerationsCorrect answer is option 'D'. Can you explain this answer? for UGC NET 2025 is part of UGC NET preparation. The Question and answers have been prepared according to the UGC NET exam syllabus. Information about The basic consideration for dividend pay out for a company excludes which one of the following?a)Investment opportunities for the companyb)Expectations of the shareholders of the companyc)Legal and financial restrictions for the companyd)Stability of the dividend considerationsCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UGC NET 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The basic consideration for dividend pay out for a company excludes which one of the following?a)Investment opportunities for the companyb)Expectations of the shareholders of the companyc)Legal and financial restrictions for the companyd)Stability of the dividend considerationsCorrect answer is option 'D'. Can you explain this answer?.
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