Assertion (A): The important aspect of dividend policy is to determine the amount of earnings to be distributed to shareholders and the amount to be retained in the firm.

Reason (R): Dividend policy of the firm has its effect on both the long term financing and the wealth of shareholders.



  • A

    (A) and (R) are correct and (R) is the correct explanation of (A)

  • B

    (A) and (R) both are correct, but (R) is not the correct explanation of (A)

  • C

    (A) is correct, but (R) is wrong 

  • D

    (R) is correct, but (A) is wrong