MCQ on Dividend Theories
Financial Management MCQ on Dividend Theories
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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
