Question

Dividend is paid only on ______.

(a) Bond
(b) Loan
(c) Shares
(d) Debenture​

Answer 1

Dividend is paid only on (c) shares.

What is dividend?

• A dividend is the returns or the profits that are given to the shareholders of a company. It is the returns on the shares invested by a person.
• In other words, it is the interest received on investing in the shares of a company.
• But we cannot call it as interest as that's the term used for returns on (a) bonds and (b) loans.
• (d) Debentures also provide some returns in the form of 'interest', hence dividend is only paid on shares.
• Please note that it is the distribution of profits among the shareholders and thus the company should earn profits to provide dividends.

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Answer 2

Dividend is paid only on (c) Shares.

Explanation for the answer:

• Dividends are paid to the shareholders out of profits which are earned by the company.
• Dividends are paid only on shares.
• Interest can be paid to the debenture holders inspite if the company has earned profits.
• Shareholders have the voting rights while Debenture holders do not possess any right for voting.
• Hence, the correct answer among all the options is option (c) Shares.

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