Question

A company that has 25,000 shares of $5.00 par value common stock issued and outstanding paid a dividend of $0.40 per share. The market value of the stock is $16 per share. The company's dividend yield is

Answer 1

The correct answer is 2.5%.

Step-by-step explanation:

A company has 25,000 shares.

The par value of the common stock is $5.

The market value of the stock is $16 per share.

The dividend paid is $0.4/share.

The company's dividend yield is

=
`(Dividend\ per\ share)/(Market\ value\ per\ share)`

=
`(0.4)/(16)`

= 0.025

So, the company's dividend yield is 2.5%.