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Business Studies · 2023 · 3 marks
CBSE 2023 · Region 1 · Set 1 · Q23
(a) (i) Name the process of holding securities in an electronic form. (ii) Name any two participants of Money Market. (iii) Name the depositories…
(a)(i)
Name the process of holding securities in an electronic form.
(ii)
Name any two participants of Money Market.
(iii)
Name the depositories that hold securities in electronic
form.
OR
(b)
State any three factors affecting the dividend decision.
Marking-scheme solution
(a)(i)
Dematerialisation
(ii)
RBI, Commercial Banks, NBFCs, State Governments,
Large Corporate Houses, Mutual Funds.
(iii)
National Securities Depositories Limited (NSDL) and
Central Depository Services Limited (CDSL)
OR
Q. (b) State any three factors affecting the dividend
(b)
decision.
Factors affecting dividend decision are :
(i)
Amount of earnings are a major determinant of dividend
decision as dividends are paid out of current and past
earnings.
(ii)
Stability of earnings is another factor affecting dividend
decision as a company having stable earnings is in a
position to declare higher dividends.
(iii)
Companies generally prefer to maintain stability of
dividends while taking dividend decision.
(iv)
If a company has good growth opportunities, it pays out
less dividend.
(v)
A good cash flow position is necessary for declaration of
dividend.
(vi)
Shareholders’ preference is kept in mind by the
management before declaring dividends.
(vii)
Taxation policy affects the dividend decision as a
higher dividend distribution tax will lead to lesser dividend
payout.
(viii)
The possible stock market reaction of dividend policy
on the share price is one of the important factors affecting
dividend decision.
(ix)
While taking dividend decision, companies take into
consideration their access to capital market.
(x)
Certain provisions of the Companies Act i.e. legal
constraints place restrictions on payout of dividend.
(xi)
While taking dividend decision, companies keep in
mind the restrictions imposed by the lenders i.e. contractual
constraints.
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CBSE Class 12 Business Studies past-paper question from the 2023 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.