The effect of overcapitalization is and of under capitalization is ________ dividend rates.

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The effect of overcapitalization is and of under capitalization is ________ dividend rates. Answer: Fall, rise

The effect of overcapitalization is a Fall in dividend rates, and the effect of undercapitalization is a Rise in dividend rates. Overcapitalization means a company has too much capital for its earnings, leading to low returns and reduced dividends, while undercapitalization results in exceptionally high profits, allowing for higher dividends.

Question context

This question is part of 🌍 Current Affairs within the broader 🌐 Current Affairs & GK subject and appears in the SPSC – Sindh Public Service Commission preparation collection. Reviewing the answer together with nearby questions helps reinforce the underlying concept and identify how it may appear in competitive exams.