Question : Assertion-Reason Questions: Chapter - Sources of Business Finance
Questions : Different Sources of Finance
Assertion: Equity shares carry a fixed dividend obligation for the company.
Reason: Equity shareholders have a preferential right to receive dividends.
Option 1: Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Option 2: Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
Option 3: Assertion is true, but the reason is false.
Option 4: Both assertion and reason are false.
Correct Answer: Both assertion and reason are false.
Solution : The correct answer is (d) Both assertion and reason are false.
The assertion is false. Equity shares do not have a fixed dividend obligation. Dividends for equity shareholders are usually decided by the company's board of directors and can vary based on the company's profitability and other factors. Unlike preferred shares, there is no fixed dividend payment associated with equity shares.
The reason is false. Equity shareholders do not have a preferential right to receive dividends. If the company declares dividends, it is usually distributed to all equity shareholders based on their shareholding and the company's dividend policy. There is no preference given to any specific equity shareholder based on their ownership.
Related Questions
Trending Articles/News
