Final answer:
A rising share price of Company Beta will decrease its dividend yield ratio, as the same amount of dividend is divided by a higher share price, resulting in a lower percentage yield.
Step-by-step explanation:
When Company Beta pays an annual dividend of $2.34 per common share, the dividend yield ratio is calculated by dividing the dividend per share by the share price. Therefore, if the share price rises, the dividend yield will decrease because the same amount of dividends ($2.34) is spread over a larger share price. For example, if the share price originally was $50, the yield would be $2.34/$50 or 4.68%. However, if the share price rises to $60, the new yield would be $2.34/$60 or 3.9%.