Q1. [1] § What is an 'Equity'/Share?
__________ is a percentage of the face value of a share that a company returns to its shareholders from its annual profit.
- (A) Dividends
- (B) Capital gain
- (C) Profit
- (D) Interest
Previously asked in CBSE board exam
2025 92 Q3 (iv)
Generated by claude-sonnet-4-6 · 2026-06-15 07:06 · grounding rag
Model Answer
(A) Dividends
Dividends is a percentage of the face value of a share that a company returns to its shareholders from its annual profit.
Explanation
- Dividend is the correct term for the portion of profit distributed to shareholders, calculated as a percentage of the face value of shares.
- Capital gain is profit from selling a share at a higher price — not a distribution from company profit.
- Interest applies to debt instruments like bonds/fixed deposits, not equity shares.
- In board exams, for MCQs, just writing the option letter (A) with the term is sufficient; one supporting line adds clarity.
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