BMM Industries pays a dividend of $1.30 per quarter. The dividend yield on its stock is reported...

Question:

BMM Industries pays a dividend of $1.30 per quarter. The dividend yield on its stock is reported at 4.1%. What price is the stock selling at?

Stock Price

It is the price of shares as determined in the marketplace as being traded by traders and floor participants alike. It is also determined based on other factors such as fundamental analysis and investors sentiment towards that stock.

Answer and Explanation:

In this question, the stock price is missing and needs to be computed. We will derive the formula using the dividend yield ratio since dividend and yield percentages are provided.

The dividend was given in the problem is distributed every quarter. We will compute for the annual dividend:

Annual Dividend = $1.30 * 4 quarters = $5.20 annual dividend

Let's compute for the stock price using the dividend yield ratio :

{eq}Stock~Price~=~\frac{Annual~Dividend~Per~Share}{Dividend~Yield~Ratio} {/eq}


{eq}Stock~Price~=~\fracNo variable 5.20 defined.{0.041} {/eq}

The stock price that yields a $1.30 quarterly dividend is at $126.83


Learn more about this topic:

Loading...
Stock Price Factors: Types & Definitions

from Focus on Personal Finance: Online Textbook Help

Chapter 12 / Lesson 8
1.3K

Related to this Question

Explore our homework questions and answers library