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    Question

    Dividend is always announced by a company on which value

    of a share ?
    A Market Value Correct Answer Incorrect Answer
    B Face Value Correct Answer Incorrect Answer
    C Book Value Correct Answer Incorrect Answer
    D Earnings per share Value Correct Answer Incorrect Answer
    E Both (a) and (b) Correct Answer Incorrect Answer

    Solution

    Dividend is a part of the profits of a company that the company distributes amongst its shareholders. When a company generates a profit and accumulates retained earnings, those earnings can be either reinvested in the business or paid out to shareholders as dividend. The dividend is always declared by the company on the face value (FV) of a share irrespective of its market value or book value. The rate of dividend is expressed as a percentage of the face value of a share per annum. For example, if a company declares a dividend of 20% and its face value per share is Rs.10, it means that the company will pay Rs.2 per share to the shareholders.

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