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‘Companies… (Class 12 Business Studies SQP 2025-26, Q19)

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Business StudiesCBSE Class 12 · Sample paper, session 2025-26 · 1 mark · MCQ

CBSE Class 12 Business Studies sample paper 2025-26: question 19

From the official CBSE sample question paper for 2025-26, section A, question 19, for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q19 · 1 mark · MCQFinancial Management

‘Companies are required to ensure that the dividend does not violate the terms of loan agreement.’ Identify the relevant factor affecting dividend decisions being discussed above.

  1. (A)Access to capital market
  2. (B)Legal constraints
  3. (C)Stock market reaction
  4. (D)Contractual constraints

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2025-26.

Hints

Open one hint at a time and try again before the next.

Hint 1

Is the restriction from a law or a contract?

Hint 2

Who signs a loan agreement?

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. A loan agreement may restrict the dividend the company can pay.

  2. Restrictions arising from loan agreements are contractual constraints (legal constraints come from law, e.g. the Companies Act). Option (D).

    1 mark

Answer: (D) Contractual constraints

Where the marks are

  • Loan agreement terms (1 mark)

Revise the chapter

Practise this chapterBoard-style questions from Financial Management, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2025-26: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.