what is the dividend yield on stock a that sells at $20/share, when company a pays a quarterly dividend of…
what is the dividend yield on stock a that sells at $20/share, when company a pays a quarterly dividend of $0.05 per share?\ndividend yield = ?%\ndividend yield = \\frac{annual dividend}{share price}
Answer
Explanation:
Step1: Calculate annual dividend
Since the quarterly dividend is $0.05 per - share, the annual dividend $D$ is calculated by multiplying the quarterly dividend by 4. So $D = 0.05\times4=0.2$.
Step2: Calculate dividend - yield
The formula for dividend - yield $Y$ is $Y=\frac{D}{P}$, where $D$ is the annual dividend and $P$ is the share price. Given $P = 20$ and $D = 0.2$, then $Y=\frac{0.2}{20}=0.01$.
Step3: Convert to percentage
To convert the decimal to a percentage, we multiply by 100. So $Y = 0.01\times100 = 1%$.
Answer:
1%