Question

Over-capitalisation may be avoided by reducing the rate of dividend on equity share. True or false

Answer 1

$\huge\red{\boxed{\blue{\mathcal{\overbrace{\underbrace{\fcolorbox{blue}{aqua}{\underline{\red{True}}}}}}}}}$

$\huge\red{\boxed{\blue{\mathcal{\overbrace{\underbrace{\fcolorbox{blue}{aqua}{\underline{\red{explanation}}}}}}}}}$

Reduced dividends. An over-capitalised company will not be able to pay a fair rate of dividend to its shareholders because it is earning a low rate of return (earnings) on its capital. ... Low rate of earnings and reduced dividends cause fall in the market value of shares of the over-capitalised company.

Answer 2

Answer:

True is the right answer