A company reports basic earnings per share of $3.50, cash dividends per share of $0.75, and a market price per share of $64.75. The company's dividend yield equals 21.4%.
Dividend yield = cash dividend per share/market price per share
$0.75/$64.75 = 1.16%

Question

Quizplus · Accepted Answer

Dividend yield is calculated by dividing the annual cash dividend per share by the market price per share, and then multiplying by 100 to get a percentage. In this case, the calculated dividend yield would be:

($0.75 x 4) / $64.75 x 100 = 4.61%

Therefore, the statement is false as the calculated dividend yield is 4.61%, not 21.4%.

A Company Reports Basic Earnings Per Share of $3