Financial Management MCQ on Dividend Theories

MCQ on Dividend Theories

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  • Financial Management MCQ
  • 1. “A bird in hand is better than two in the bush” principle related to which theory of dividend?

     (a) Walter J.E.

    (b) Miller M and Modigliani F. theory

    (c) Gordon’s Model

    (d) Residual theory of dividend

    Answer (c) Gordon’s Model

    2. “Residual theory of dividend” is introduced by ?

    (a) Lintner J.

    (b) Walter

    (c) Gordon

    (d) Miller M.

    Answer (a) Lintner J.

    3. Relevance of dividend theory propounded by

    (a) Miller M and Modigliani F.

    (b) Lintner J.

    (c) Walter J.E.

    (d) Gordon

    Answer (c) Walter J.E.

    4. “Residual theory of dividend” introduce in the year ?

     (a) 1936

    (b) 1946

    (c) 1956

    (d) 1966

    Answer (c) 1956

    5. The main decision criterion in dividend decision is

     (a) Maximization of national income

    (b) Maximization of shareholders wealth

    (c) Maximization of profit

    (d) None of the above

    Answer (b) Maximization of shareholders wealth

    6. Who propounded the irrelevance theory of dividend?

    (a) Miller M and Modigliani F.

    (b) Lintner J.

    (c) Walter

    (d) Gordon

    Answer (a) Miller M and Modigliani F.

    7. Irrelevance theory of dividend introduced in the year ?

    (a) 1951

    (b) 1961

    (c) 1971

    (d) 1981

    Answer (b) 1961

    8. What us operational justification of Modigliani approach to irrelevance of dividend?

    (a) Agency problem

    (b) Insider trading

    (c) Arbitrage

    (d) None of the above

    Answer (c) Arbitrage

    9. The residual theory of dividend advocated the……..of dividend to the valuation of an entity

    (a) Relevance

    (b) Irrelevance

    (c) Both

    (d) None of the above

    Answer (b) Irrelevance

    10. The walter’s model and Gordan’s Model advocate the

    (a) Irrelevance of dividend

    (b) Relevance of dividend

    (c) Both

    (d) None of the above

    Answer (b) Relevance of dividend

    11. Relevance of dividend theory introduce in the year

     (a) 1943

    (b) 1953

    (c) 1963

    (d) 1973

    Answer (c) 1963

    12. The Walter’s Model and Gordon’s model of relevance is based on

     (a) Cost of capital

    (b) Return on investment

    (c) Both of the above

    (d) None of the above

    Answer (c) Both of the above

    13. Which theory advocates that the dividend policy of an entity is a part of its financing decision?

     (a) Miller M and Modigliani F.

    (b) Residual Theory of Dividend

    (c) Walter J.E.

    (d) Gordon

    Answer (b) Residual Theory of Dividend
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