Multiple choice

Which of the following is an internal factor affecting dividend policy?

  1. General state of economy

  2. State of capital market

  3. Financial needs of the company

  4. Legal restrictions
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

It is an internal factor affecting the dividend policy as it is concerned with the company in particular. If the company needs funds for larger profitable projects, the company would retain the major part of the earnings and distribute less dividends.

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