A company pays a dividend of €0.40 per share to shareholders in March 2020 in respect of its financial year ended 31st December 2019. This payment is called which type of dividend payment?

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Prepare for the Qualified Financial Adviser Exam 2 with flashcards and multiple choice questions, complete with hints and explanations. Get exam-ready and increase your confidence with our comprehensive study materials!

Multiple Choice

A company pays a dividend of €0.40 per share to shareholders in March 2020 in respect of its financial year ended 31st December 2019. This payment is called which type of dividend payment?

Explanation:
Dividends are classified by when they are paid in relation to the financial year. Interim dividends are paid before year-end, based on results up to that date. Final dividends, on the other hand, relate to the entire year’s profits and are typically declared after year-end and paid after the annual general meeting. Since the €0.40 per share is paid in March 2020 but refers to the year ended 31 December 2019, it distributes profits for the full year and is therefore a final dividend.

Dividends are classified by when they are paid in relation to the financial year. Interim dividends are paid before year-end, based on results up to that date. Final dividends, on the other hand, relate to the entire year’s profits and are typically declared after year-end and paid after the annual general meeting. Since the €0.40 per share is paid in March 2020 but refers to the year ended 31 December 2019, it distributes profits for the full year and is therefore a final dividend.

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