The dividend yield for stock is computed by dividing:
a) Earnings per share by cash dividends per share.
b) Annual cash dividends per share by the market value per share.
c) Annual cash dividends per share by earnings per share.
d) Cash dividends per share by retained earnings.
e) Market price per share by cash dividends per share.
What is Dividends Yield
Dividend Yield refers to a financial ratio used by businesses to gauge the total returns of investments by an investor as a percentage of its current stock price. Moreover, it is said that higher Dividends Yield is not always a good indicator because it can sometimes be attributed to the declining stock price of a particular corporation.
Answer and Explanation:
Answer: c) Annual cash dividends per share by earnings per share.
The formula to calculate the Dividend Yield is by dividing the total cash dividends paid during the year by the current stock price; hence, the correct answer is Option C.
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from Corporate Finance: Help & ReviewChapter 2 / Lesson 10