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4. Fridgidaire Company earns $2.00 per share. Today the stock is trading at $40. The company pays an annual dividend of $1.00. a. Calculate the price-earnings ratio. (Round your answer to the nearest whole number.) Price-earnings ratio b. Calculate the yield on the stock. (Round your answer to the nearest tenth percent.) Yield on the stock

User Zjuhasz
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Answer:

price earning ratio are 20:1

yield of stock is 2.5%

Explanation:

given data

earn = $2 per share

price treading = $40

dividend = $1

to find out

price-earnings ratio and yield on the stock

solution

we find here price earning ration by given formula that is

ratio = price treading / earning .....................1

put here value

ratio = 40 / 2

ratio = 20

so price earning ratio are 20:1

and

yield of stock is calculated as

yield of stock = dividend / price treading ...............2

put here value

yield of stock = 1/ 40

yield of stock = 0.025

so yield of stock is 2.5%

User Jure
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