Under which of the following circumstances is a company not likely to declare a higher dividend?

(a) When the cash flow position of the company is strong.

(b) When a company has a lucrative forthcoming business opportunity.

(c) None of the above.

(d) When the earnings of the company are high.

Answer (b) When a company has a lucrative forthcoming business opportunity.

Explanation: When a company has a high profit earning capability in a future project then the company is not likely to declare a high dividend. The retained earnings will become their investment for the future project.

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